Oil Retreats Below $80 As EIA Inventories Fall, US Production Up
Crude Oil turned bullish at the beginning of July and made some decent gains as it increased within reach of $85 last week, when it started to retreat lower. First, this retreat looked like a retrace before the bullish trend resumed again, but now it seems more like a bearish reversal after the bullish run.
US WTI crude fell below $80 yesterday, as the economic headwinds, particularly from Chin keep coming. The Chinese banking sector is showing signs of cracking, while the economic data has been showing increasing weakness. So, the Oil demand headwinds will outweigh supply cuts in the near term. WTI was modestly lower yesterday morning, but the decline picked up pace later in the day, despite another major drawdown in the EIA crude Oil inventories last week, as the data below shows.
WTI Crude Oil H4 Chart – MAs Are Getting Broken
The 100 SMA has turned into resistance
U.S. crude oil refinery inputs averaged 16.7 million barrels per day during last week, which was 166k barrels/day more than the previous week’s average. Refineries operated at 94.7% of their operable capacity last week. WTI crude was finding support at moving averages, but ow the 100 SMA (green) seems to have turned into resistance on the H4 chart, so sellers seem to be in control.
Weekly US EIA Oil Inventories
- US weekly oil inventories -5,960K vs -2,320K expected
- Prior week crude inventories were +5,851K
- Gasoline -261K vs -1260K expected
- Distillates +296K vs -473K expected
- Refinery utilization +0.9% vs +0.4% expected
- Production estimate 12.7 mbpd vs 12.6 mbpd prior
- Impld mogas demand: 8.85 mbpd vs 9.30 mbpd prior
The API data late yesterday showed:
- CrudeOil -6,195K
- Gasoline +700K
- Distillates -800K
US crude oil inventories are at the lowest since January but the US output estimate is at the highest in three years. WTI is down about 20 cents since the release.
US WTI Crude Oil Live Chart
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