Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Article / 29 June 2016 at 14:11 GMT

Crude oil left Brexit behind to focus on own fundamentals

Head of Commodity Strategy / Saxo Bank
  • Key resistance is once again at $50/b
  • Oil inventories expected to fall by 2.5m barrels
  • Keep an eye on weekly production estimates
 These storage facilities should be somewhat emptier. Photo: iStock

By Ole Hansen

The Brexit shock last Friday triggered risk reduction across most asset classes including crude oil with WTI tumbling 7.5% up until Monday. Since then a weaker dollar and a general recovery have seen traders once again turn their attention to oil's own fundamentals, not least the weekly inventory report from the EIA.

After managing to hold $45.83/b and thereby creating a double bottom in the market WTI crude has recovered strongly with key resistance once again found at $50/barrel.
WTI crude oil, first month cont.
 Source: Bloomberg

US oil inventories probably fell in the region of 2.5 million barrels last week according to a Bloomberg survey. Other data to look out for are the weekly production estimates which have seen an almost continuous decline for the past five months. 

Gasoline demand and inventories combined with refinery activity make up the other key component of the report.
DOE data
In this interview today from the Bloomberg's Oil Buyers Guide i set out some of my thoughts about oil in the aftermath of Brexit and where I see it go next. 

The EIA report is due 1420 GMT. Click here to see main features.

Comments about the inventory data will be posted below once released.

– Edited by Clare MacCarthy

Ole Hansen is head of commodity strategy at Saxo Bank. His Twitter account was cited by MarketWatch as one that investors should follow in 2016.

29 June
Ole Hansen Ole Hansen
EIA result
29 June
John Roberti John Roberti
dear Ole, gasoline Consumption is declining, import's are declining exports moving up, production is declining slightly by 50MB/D and the market seems to believe this is bad for oil market and prices are going up! I am a bit at a loss with this reaction? Could you explain what I am missing?
29 June
Ole Hansen Ole Hansen
Just looking at inventories and production estimates this report is bullish for crude oil considering the bigger than expected decline. The bigger than exp. inventory drop was partly the result of weaker imports (-884k b/d). Gasoline inventories remain a concern once again rising against seasonal expectations
29 June
Ole Hansen Ole Hansen
John. The production decline and inventory rise triggered the initial reaction but considering how the inventory drop was achieved i could see oil struggle to make much more out of this. Also considering the strong come-back since Monday.
29 June
John Roberti John Roberti
thanks Ole, in fact, prices appear to stabilize now at least! Let's see what they will do later. It appeared a few times already that the market digests the figures with some delays pertly due to the frequent bad information from API the day earlier...?


The Saxo Bank Group entities each provide execution-only service and access to 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 Rules of Engagement and (v) Notices applying to 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 Bank Group by which access to 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 Bank 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 Bank 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 or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. 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 Bank Group and should not be construed as a record of ourtrading 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 Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail