Crude oil came under a broad-based selling pressure in the post-settlement trade on Tuesday after American Petroleum Institute's stock report revealed a surprise build in U.S. crude stocks. The barrel of West Texas Intermediate quickly lost 0.7$ after the release and is now trading at $48.75, losing 2.75% on the day.
"Crude inventories rose by 1.8 million barrels in the week ending July 28 to 488.8 million, compared with analysts' expectations for a decrease of 3 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.6 million barrels, and refinery crude runs rose by 142,000 barrels per day, API said," Reuters reported.
On Wednesday, investors will look at the EIA's stock report for fresh clues on crude oil production in the U.S. After dropping by 7.208 million barrels in the previous week, crude oil stocks are expected to drop further by 2.9 million barrels for the week ending July 28. Today's report could ramp up the expectations for a smaller draw or even an increase in crude inventories, which could put more pressure on the barrel of WTI.
In the meantime, the fact that the latest report showed that output by the Organization of the Petroleum Exporting Countries (OPEC) rose in July despite the cartel's agreement to reduce production suggest that the high oil supply is likely to continue to weigh on the prices.
- OPEC oil output jumps to 2017 high on further Libya recovery - Reuters
- OPEC July exports rise to 2017 high to 26.68m b/d - Kpler
Technical outlook
$50 (psychological level) remains as a critical hurdle for the barrel of WTI ahead of $51.05 ahead of $52 (May 25 high). On the downside, supports could be seen at $47.85 (Jul. 26 low), $46.40 (Jul. 25 low) and $45 (psychological level).
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