As we expected the market was closely monitoring the EIA crude oil stock changes report. And it did confirm the more significant than expected draw of crude inventories as a result of Harvey storm damages.
The storm hit the Gulf two weeks ago, initially triggering oil prices slide, as refineries reduced the capacities slowing the demand on crude. However, later on the restarting activity of the refineries returned back the demand on oil , while production is still under pressure. According to EIA data, the output reduced by 8%, from 9.5 mln barrels to 8.8 mln barrels per day.
By the way, oil shipments suffered as well. The crude import to the Gulf slid to 1990s lows. And it will take not less than two weeks to recover the production and shipments to the previous levels, giving Brent all the chances to go higher.
Now the focus turns to Irma hurricane that is forecasted to bring even more damages this Saturday. Every coming EIA weekly crude report will be scrutinized by the market, and every significant inventories draw may bring new splashes of demand on Brent.
Brent is ready to test 55.00 resistance today, however, we don’t expect the level will surrender from the first time given the strength of the barrier, and the coming weekend triggering take profit in the market.