Wednesday Is Fast Becoming Oil's Least Favorite Day of the Week

  • Focus on weekly EIA report highlights oversupply concerns
  • Losses on WTI average 3.2% over the past four Wednesdays

Rathbones' CIO Sees Oil in $40 to $50 Range

Every Wednesday, WTI gets whacked.

With investors focused on the question of oversupply in the oil market, a familiar pattern is emerging in the price of crude. On Wednesdays -- when the Energy Information Administration releases its latest data for U.S. production and inventories -- oil prices take a tumble. The pattern has held for the past month, with losses on a barrel of West Texas Intermediate averaging 3.2 percent, or $1.56, over the past four Wednesdays.

“No Wednesday without a good fall in prices seems to be the current motto of the market,” wrote analysts at JBC Energy GmbH, after the latest EIA data showed U.S. production increased to the highest since August 2015. While stockpiles of crude fell by 2.45 million barrels to 509.1 million last week, inventories remain about 100 million barrels above the five-year average.

The weekly falls illustrate rising concern that a concerted effort by OPEC members to cut output won’t be enough to rebalance the market and crimp U.S. production. Prices for both WTI and the international benchmark Brent drifted into bear market territory this week, down more than 20 percent since the peak of the last bull market.

“There appears to be no topside limit to production in the U.S., or at least it hasn’t been discovered yet,” said Edward Bell, oil analyst at Emirates NBD PJSC. “The persistent rise in the drilling rig count suggests the market will need to withstand more, not less, U.S. oil in the near term.”

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