Today at 03.30 (GMT+3) the American Petroleum Institute (API) released its updated weekly crude stocks data. With forecast expectations of -0.900 million barrels, the actual value amounted to -7.400 million barrels, i.e. the gap between expectations and actual figures was more than 8 times.
The publication of the API report itself does not usually have a strong impact on the global oil market. But here one should keep in mind that the API report precedes another, more impactful report, namely the government’s Energy Information Administration (EIA) report on US crude oil inventories, which will be published today at 22.00 (GMT+3).
In most cases, API and EIA estimates are unidirectional, so with certain assumptions, we can say that the API report is ahead of the curve. If this data correlation is confirmed today, a strong actual divergence with the size of expected oil inventories may be seen. The forecast estimate indicates an expectation of an increase in inventories to -0.600 million from last week’s level of -0.846 million barrels. If the forecast does not come true and the actual stockpile level is less than -2.00 million barrels, it will provide strong short-term support for oil prices, including Brent.
From a technical point of view, the upward reversal is supported by the formed bullish divergence of Brent price with RSI indicator.
The final recommendation is to buy Brent oil provided that the actual U.S. crude oil inventories according to the EIA report are below the level of -2.00 million barrels.
Profits should be taken at the level of 76.00. A Stop-Loss could be set at the level of 71.50.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, does not exceed 2% of your deposit.
