A large draw in total U.S. crude oil stocks reported by the American Petroleum Institute (API) late yesterday has resulted in a light round of short covering in a market that remains oversold. As of this morning the crude oil market is still in positive territory but well off of the overnight highs hit after the API data release as the industry awaits the more widely followed EIA oil inventory snapshot.
Offsetting the draw in crude oil stocks reported by the API was another disappointing PMI number out of China. The Caixin/Markit China manufacturing PMI declined to 47 in September, or the lowest level since March of 2009. An index level of 47 is also in the contraction mode for the manufacturing sector…an energy intensive area of the economy. Yet another economic data point that suggests oil demand growth is not likely going to be the solution to the oversupplied global oil market.
Although the API only partially releases their inventory data into the public domain what they have released is pointing in the direction of another build in total combined inventories of crude oil and refined products even with a strong decline in crude oil stocks. A more complete picture will emerge when the EIA data is released at 10:30 AM EST today.
Global equities continued to move lower over the last twenty four hours with the EMI Global Equity Index declining by 1.13%. The year to date gain widened to 6% and is once again approaching the worst level of the year hit in early September. There are now eight of the ten bourse in the Index in negative territory for 2015 with Paris still on top of the leader board with Hong Kong slipping into the worst performer of the year slot. Global equities have been a negative price directional driver for the oil markets this week.