US Crude Stockpiles Notch Additional Gains

After last week’s surprising inventory climb reported by the Energy Information Administration, data released by the American Petroleum Institute on Wednesday displayed further gains.  According to the advance figures, US onshore inventories rose by 4.200 million barrels last week despite expectations that stockpiles would fall by -1.500 million barrels.   Crude oil in storage at Cushing also rose, climbing 528,000 barrels last week, beating forecasts of 500,000 additional barrels and marking increases in four of the last five weeks.

WTI futures fell nearly $0.90 after the announcement, trending back below $54.00 per barrel ahead of Thursday’s official data from the EIA.  The biggest question looming over the market is whether shale production will continue to rise and if the OPEC deal implementation will be successful or face threats from noncompliant members.  Crude for February delivery has recovered all the prior session’s losses, retaking the $54.00 level.

Amid a brightening outlook in the energy patch combined with improving economic fundamentals, the latest Russian manufacturing purchasing managers’ index came in stronger than expected.  The PMI for December reported by Markit Economics came in at 53.7, slightly higher than 53.6 print back in November while marking the fastest pace of expansion in 69 months.  Part of the gains are attributed to rebounding orders which contracted at the slowest rate in 40 months and strong job creation metrics.

Despite the possibility of additional sanctions following the US accusation of election tampering, the Russian economy continues to shake of contractionary economic activity after years of European and American sanctions.  Despite a significant strengthening in the US dollar over the last few weeks, the Ruble has surprisingly climbed, reaching the highest point since July of 2015 earlier in the session.