Here’s Why Oil Prices Fell When They Should Have Climbed

Wednesday was a day to look to the all-telling charts for hard-to-answer questions in the oil market.

U.S. oil had some of its biggest losses for September Wednesday despite data that should have helped it float.

The U.S. Energy Information Administration said stockpiles fell by 1.9 million barrels last week, when analysts had only forecast a fall of 100,000 barrels. Usually that kind of data is a sign of larger demand or smaller supply than expected, and helps prices rise.

Prices did spike to nearly a one-week high, and then quickly reversed, with the U.S. crude oil benchmark falling 4.1% to $44.48 a barrel for the day without any breaking news that provided a logical impetus, brokers and analysts said. It may have been that spike itself that brought prices down, they said.

Many traders would have seen the spike as a great time to cash out. Day-traders had been betting on rising prices since late Tuesday when the American Petroleum Institute reported last week’s stockpile draw could be as high as 3.7-million-barrels. Then they got the data and their brief spike in prices—and headed for the exits. Oil futures have logged a decline of more than 50% since last summer, and with a large glut of oil still out there, traders with an eye on the charts would have felt the urge to restart oil’s selloff before they got left behind, brokers and analysts said. (by Tim Puko, Wall Street Journal)