Crude oil supported by US stock draw Crude oil supported by US stock draw Crude oil supported by US stock draw

Crude oil supported by US stock draw

Ole Hansen

Head of Commodity Strategy

Summary:  WTI remains stuck around $55/b with the prospect of a big stock draw and Opec production cuts off-setting continued worries about global growth and demand

Crude oil continues to recover after taking a hit last Friday when China announced a 5% tariff from September on US crude oil imports. Since then the market sentiment has improved with Opec saying that they expect a “significant” reduction in global crude inventories during the second half. Adding to this a somewhat less confrontational tone from Trump towards China and not least raised expectations that US stockpiles dropped significantly last week.

The US Energy Information Administration will release its ‘Weekly Petroleum Status Report’ at 14:30 GMT and expectations for a bumper drop was raised when the American Petroleum Institute last night said that stocks dropped by more than 11 million barrels last week. Especially the continued drop at Cushing, the delivery hub for WTI crude oil futures, helped reverse some of the relative WTI losses seen against Brent since last Friday following the Chinese announcement.

Check my Twitter feed  for comments and charts once the EIA report has been released.

The WTI crude oil chart below shows how the market has been pivoting around $55/b since June. During this time the focus has been alternating between the positive impact of OPEC+ production cuts and the seasonal pick-up in demand and trade war driven worry about a global economic slowdown. We continue to view the multiple attempts to recover during this time as fragile given the recessionary risks currently being signaled through the collapse in global bond yields and the inversion of the US yield curve.

Ahead of tariff hikes, both US and Chinese, on September 1 we see limited upside potential with resistance being the trendline from the April peak. The downside risk below $50/b is equally limited through OPEC’s willingness to cut production to maintain stability.

Check my Twitter feed  for comments and charts once the EIA report has been released.

Source: Saxo Bank


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.