Oil ran into tech trouble as the U.S. tech sector is under fire leading to a sell-off in stocks against a backdrop of rising oil inventory. The Data breach scandal at Facebook is only one of many quick rising problems for the many tech firms and I am sure somewhere the Winklevoss twins are smiling. As the whisper number suggested, oil inventories increased by a whopping 5.32 million, according to the American Petroleum Institute(API) barrels. This was led by an increase in U.S. imports, a 1.66-million-barrel build in Cushing Oklahoma and a 7-million-barrel sale from the U.S. Strategic Petroleum Reserve to feed our oil-hungry refineries.

The U.S. sale from the reserve was expected at some point but the timing of the purchase shows that refiners need supply now because even with the increase in supplies this week, oil supply are below the average range for this time of year. Platts reported that the sale was made to at least five different companies, rumored to be Atlantic Trading & Marketing, Phillips 66, Marathon Petroleum, Motiva, and Trafigura, according to sources. Phillips 66 was sold the largest amount of crude, according to Platts sources. While we are seeing great increases in U.S. shale oil production, the truth is that many U.S. refiners have more lighter condensate then they need for heavy crude to ramp up.

The sharp increase in U.S. supply may temper prices. The fear that the tech sector sell-offs may bleed into the overall economy may hurt prices. Yet we feel that those fears are overplayed. While the technicals on oil look weak in the short run, it does not change the bullish outlook in the long run.

While a slowdown in tech is a potential threat to the economy, the reality is that Facebook and Twitter don’t run on oil. The oil sector of the economy was more concerned with a trade war and if that is averted we will raise our oil demand expectations. A deal with China to potentially open their economy is very bullish for oil demand expectations as well as global economic growth.