It is a moment of high volatility for Oil markets on both side of the Atlantic: during Asian session both moved up after the drop in the US Oil inventory and relative products, but now they are in negative territory yet.
At the time of writing Brent is trading down 0,21% at $46.12bbl while WTI is making a negative performance of 0,67% at $44,61bbl after having touched the $45.08bbl level.
The American Petroleum Institute (API) data showed a drop in the US Oil inventory of 752,000 barrels against all expectations which saw ad increase of almost 3 million barrels. Distillates on the other hand experimented the first inventory drop in seven weeks with a 343,000 barrels decrease. Also Gasoline inventory went down 3.7 million barrels.
Looking at the currency that is most influenced by the US Oil price, the USD/CAD cross find a good support @ 1.3192 and at the moment is traded positively of .18% @ 1.3222.
The cross still remains fairly bid, despite difficulties to extend gains above the 1.3250 barrier due especially to the slowdown of the Oil price decrease after the API report.
Another element to fuel the pair price action is the recent slowdown of the US Dollar against its major peers, which let the USD/CAD to be capped.
Looking at the chart the first significant resistance is seen @ 1.3250 (psychological level) after which we can find another psychological one at 1.3300. On the opposite side the first hurdle to the downside is seen @ 1.3192.
All the eyes are now facing Algeria where the meeting could (unlikely) lead to a production freeze agreement. Traders have to pay attention to the US Government weekly inventory data too, which could fuel unexpected movements of the cross. Not to forget the US economic data and the Yellen’s speech.