USD/CAD drops as crude oil inventories surge beyond forecasts

USD/CAD declined 0.4% to 1.4285 following the EIA's weekly crude oil inventory report showing a surprising build of 3,391K barrels versus expectations of a 1,702K draw. The unexpected inventory increase, reversing last week's 3,832K drawdown, has provided support for oil prices and consequently the Canadian dollar. Most striking was the massive gasoline inventory build of 8,977K barrels, far exceeding the 3,565K forecast and compounding last week's substantial increase. Distillate inventories showed a minor draw of 29K barrels against expectations of a 512K build. The larger-than-expected crude stockpile suggests weakening US energy demand, which could pressure WTI prices lower and weaken the USD/CAD pair further. Technical indicators show immediate support at 1.4250, with resistance at 1.4320. Traders should monitor upcoming Canadian inflation data for additional directional cues.