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Oil prices are heading lower; at the time of writing Brent it is hovering around the mid-sixties

Yesterday, the Brent crude price took a steep decline just around the release of the EIA inventory stats. The stats showed an increase in crude oil inventories of 1.9 mbbl, an increase in gasoline inventories of 3.4 mbbl and an increase in distillate inventories of 3.9 mbbl. Usually this is a bearish sign, and lately draws have been rare. But this week and last week, builds were reported by the EIA which likely is weighing on prices.

Last week the US crude oil production reached 10.251 mbpd which is an increase of more than 330 kbpd since the week earlier, so the fundamentals on the production side looks increasingly bearish. Furthermore, the US refinery utilization rate increased by 4.4%. An increase like this explains the build on the products, but would intuitively entail a draw on crude oil stocks. But in terms of crude the opposite happened which sparked the large decline, and was likely triggered by the huge increase in production.

To look out for is the Baker Hughes rig count tomorrow, to see if more rigs are coming online. If more rigs are going online we could see a longer-term pressure on the price if demand is not able to keep up.So expect volatility in the market to remain.

Turning to economic data, more central bank speeches are up today. Overnight Chinese trade balance data came out lower than expected at 20.34B versus 54.69B previous.