US Crude Production Surges To Record Highs

EIA Reports Further Inventories Build

In its latest report, the Energy Information Administration reported yet another rise in US crude stores.

The report noted that in the week ending November 22^nd, US crude stores were higher by another 1.6 million barrels. This result was in stark contrast to analyst forecasts of a 400k barrel drawdown and marks the fifth consecutive weekly rise in inventory levels.

With this latest increase, US crude stores are now sitting at 452 million barrels, both their highest reading since July and also 3% above the five-year average for this time of year.

Gasoline Inventories Rise

The inventories report also showed that US gasoline stores were higher by 5.1 million barrels over the week, again beating forecasts of a 1.2 million barrel increase. Coming on the back of the previous week’s 1.8 million barrel rise in gasoline stocks, gasoline prices have been heavily lower today.

Distillate stockpiles bucked the trend again, however, rising by 700k barrels over the week. This marked a stark shift from the prior week’s 2.5 million barrel decline.

Distillate fuel production over the week, at 5.1 million barrels per day, was roughly unchanged on the prior week.

US Crude Production Hits New Highs

One of the main points from the report, which has weighed so heavily on crude prices, was that US crude production surged once again last week. Production jumped by 100k barrels per day to hit another record high of 12.9 million barrels per days.

US Moving From Importer To Exporter

The seemingly relentless rise in US crude production has seen the US moving increasingly away from its traditional position of being a net importer of crude and further towards becoming a net exporter.

Over recent months, net exports have outstripped net imports on several occasions. In its report, the EIA noted that once again, net crude US imports were down by a further 235k barrels per day.

Trade Deal Still key Focus

The data will be a disappointing blow to bulls who had been enjoying a rally in crude over the week so far.

The latest news reports around ongoing US-China trade talks have seen encouraging comments from President Trump.

The President’s comments that the negotiations are in their final stages have fuelled expectations of a forthcoming trade deal. This would be a significant upside driver for oil prices.

Despite the concerns over the demand environment for crude, which have seen prices falling in the short term, the outlook remains positive for crude. Oil seems well support into the post-EIA dip as traders continue to focus on the prospect of a trade deal.

Technical Perspective

Crude continues to trade higher within the bullish channel which has framed recent price action. The rally has met resistance at the 58.69 level for now. However, while still in the channel, focus remains on further upside.

Above the 58.69 level, the next key topside zone is the round figure at 60 (with the channel top coming in just ahead). To the downside, the key structural level to watch is the 55.16 level, which comes in around the channel low. Only below here will the bullish focus shift.