Sell the fact again: Oil turns negative despite large inventory build

Read full post at forexlive.com

WTI crude oil is now trading fractionally lower on the day at $73.20 and from a distance it’s tough to see why. Yesterday’s API numbers and today’s US inventory data were both surprisingly bullish. Some of the selling might be coming on the slow wind-down of Russian production. Officials said sales are down 300k bpd so far in March compared to the 500k bpd initially pledge, though the slow moves were previously flagged.

In any case, what’s happening today follows an unmistakable pattern that’s unfolded for months. The API numbers are leaking and traders are front-running them and then covering partly when the API numbers are released and partly when they’re confirmed in the EIA data. It was a conspicuous trade as oil was falling and inventories were building early this year and now it looks to be unfolding in the opposite direction as inventories tighten.

In terms of spillover, the weakness isn’t having an effect on the Canadian dollar as the broad risk trade improves. Still, it’s worth watching closely as AUD and NZD soften.