WTI drops back to $ 43, eyes on EIA data

Oil futures on NYMEX stalled its recovery mode and came under fresh selling last minutes, dropping back towards the lowest levels seen since November last year.

The bulls failed to benefit from a modest draw in the US crude inventories, as reported by the API late-Tuesday. The API report showed that the US crude stockpiles declined by 2.7 million barrels for the week ended June 16.

Further, the oil traders appear to pay no heed to growing expectations that the EIA crude inventory report will also show a drawdown in stockpiles. Analysts polled by S&P Global Platts expect the EIA to report a decline of 2 million barrels in crude inventories.

Meanwhile, , the latest report of the Saud King appointing a new Crown Prince also added to the uncertainty around oil markets, collaborating to the downside risks in the commodity.

On Tuesday, the black gold witnessed heavy selling pressure and extended the previous decline, as oversupply concerns continue to haunt markets, despite the reports of strong compliance by OPEC and non-OPEC oil producers with an output cut deal.

Reuters quoted a source familiar with the matter on Tuesday, citing that OPEC and non-OPEC oil producers' compliance with the output deal reached 106 percent in May.

All eyes now remain on the official US government figures on the crude stockpiles due later on Wednesday. At the time of writing, WTI trades -0.80% lower at $ 43.13, while Brent drops -0.78% to $ 45.66 mark.

WTI technical levels 

Jason Sen, Director at DayTradeIdeas noted: “Shorts need stops above 4460 to targets a selling opportunity at 4505/15. Try shorts with stops above 4540. Bears are still in full control so a break below 4290 targets the November low at 4230/20. However in such severely oversold conditions the downside is likely to be more limited at this stage. We are likely to see sideways trading sooner rather than later to ease these conditions.”