The EIA reported an unexpected 7.2 million barrel build in U.S. crude oil inventories

Recap: Oil prices fell from 5 month highs after the EIA reported an unexpected 7.2 million barrel build in U.S. crude oil inventories for the week of March 29. This compares to the expected 1.2 million barrel draw. Trading was choppy, as prices opened the session trading to the upside. The inability for May WTI to trade above $63.00 prompted a round of technical selling, taking this spot contract below unchanged, to an intermediate session low of $62.38, a mere 2 cents above the 200-day moving average of $62.36. Day traders sprang into action, pushing May WTI back above unchanged, but gains were severed by the large inventory build, and this spot contract slipped back below unchanged, to a session low of $62.06. Losses were trimmed, with May WTI settling at $62.46 a barrel, down 12 cents, or 0.19 percent. June Brent settled at $69.31 a barrel, down 6 cents, or 0.09 percent. May RBOB settled at $1.9512 a gallon, up 2.27 cents, while heating oil for May delivery fell 0.0021, to settle at $2.0068 a gallon. 

Technical Analysis: WTI remains above $62.32, the current 200-day moving average and $61.13, the 50 percent retracement provided by the range between the October 2018 high of $79.43 and the December low of $43.59. Although we support higher prices with the possibility of reaching $65.00, we would not discount a shake out to the downside, with a test back towards $61.13. Resistance is set at $63.98 and above that at $65.70. Support is set at $62.00 and below that at $61.13.

Fundamental News: The EIA reported that US crude oil stocks unexpectedly increased last week as imports rose, while gasoline and distillate stocks fell.  Crude inventories increased by 7.2 million barrels in the last week, with crude stocks in Cushing, Oklahoma increasing by 201,000 barrels.  US Gulf Coast crude inventories increased by 8.7 million barrels last week, the largest increase since September 2017.  Net crude oil imports increased by 386,000 bpd on the week. Gasoline stocks fell by 1.8 million barrels, while distillate stocks fell by 2 million barrels.

Forces loyal to eastern Libyan commander, Khalifa Haftar, have been ordered to move to western Libya to fight militants.  The deployment is likely to alarm the internationally recognized government in Tripoli, whose Prime Minister Fayez al-Serraj has been negotiating a power sharing deal with a parallel administration in the east that is allied to Haftar.

Russia’s Lukoil signed a contract for hydrocarbon exploration and development of the Zhenis block in Kazakhstan’s sector of the Caspian Sea.  Lukoil will perform drilling of at least one exporation well and a seismic survey.

The Petroleum Association of Japan reported that the country’s crude oil stocks in the week ending March 30th increased by 4.75 million barrels on the week but fell by 520,000 barrels on the year to 78.88 million barrels.  Japan’s gasoline stocks increased by 60,000 barrels on the week but fell by 170,000 barrels on the year to 10.18 million barrels, while its kerosene stocks were unchanged on the week and fell by 1.08 million barrels on the year to 8.37 million barrels and naphtha stocks fell by 600,000 barrels on the week and by 1.27 million barrels on the year to 8.64 million barrels. 

IIR Energy reported that US oil refiners are expected to shut in 1.4 million bpd of capacity in the week ending April 5th, increasing available refining capacity by 388,000 bpd from the previous week.  The offline capacity is expected to fall to 1.1 million bpd in the week ending April 12th. 

Colonial Pipeline Co said its Line 22, a mixed products line on the country’s largest fuel network that was shut after a report of a product release on Sunday, has resumed normal operations.  Repairs to the line, which runs from Greensboro and Selma, North Carolina was completed on April 2nd. 

Early Market Call - as of 8:15 AM EDT

WTI - May $62.61, up 15 cents

RBOB - May $1.9469, down 44 points

HO - May $2.0133, up 61 points