Inventories Rise, but not as High as Forecast

Crude oil prices remained supported this week on the back of the latest data from the Energy Information Administration.

The EIA reported that in the week ending February 14^th, US crude stores rose by 400k barrels. Despite the rise, crude prices retained a bid as the increase was far less than the 3.5 million barrel increase forecast.

The report also showed that gasoline stores fell by 2 million barrels over the week. This was in stark contrast to the 435k barrel gain forecast. Distillate stockpiles, which include diesel and heating oil, were also lower by 636k barrels over the week. However, this was less than the 1.5 million barrel decline forecast.

Refinery Crude Runs Up

Another key feature of the report was the refinery crude run figure. This was higher by 190k barrels per day, with refinery utilization rates rising by 1.4%. The jump In refinery crude runs suggests that the turnaround season in the US is now over.

Elsewhere, the data showed that net US crude imports were lower by 1.03 million barrels per day.

The drop in net crude imports, along with increased refinery activity, has resulted in the minor build-up in US crude stores. However, this build-up has not damaged sentiment and crude prices continue higher.

COVID-19 Still key

The rally in crude prices over recent weeks centered around the ongoing coronavirus outbreak.

With new cases of the virus in China having reportedly slowed down, the market is hopeful that the outbreak will start to calm down.

The market is also being boosted by expectations of further action from OPEC when it meets next in March.

Last week, OPEC slashed its 2020 global oil demand outlook by 230k barrels per day. The EIA followed up on that downward revision this week by reducing its own global demand forecasts b 378k barrels per day.

The EIA cited the COVID-19 outbreak as the main reason for the downgrade. It projected that oil demand could fall by 190k barrels per day this year as a result of the travel restrictions in China.

Technical Perspective

The rally in crude prices this week has seen oil trading back up to test the 54.75 level. This, so far, is holding as resistance. For now, focus is on further upside with an eventual upside break of 54.75 to lead to a test of the 57.50 level next. If price reverses lower from here, the key area to watch will be the 50.50 lows, with the rising trend line from 2018 lows coming in just below.