WTI extends the drop to $ 56.50 ahead of API data

• Concerns over rising US supplies and risk-off action drag oil lower.
• Oil could retest $ 55 should the API report show a jump in the US crude stocks.

The recent bounce in WTI (oil futures on NYMEX) lost steam on Tuesday, as the bears returned to the markets amid increased fears over rising global supplies, with the focus now shifting towards US weekly crude supplies report due to be published by the API later today.

The US crude oil production has soared by almost 25% this year, to a record 11.7 million barrels per day (bpd). More so, the risk-off sentiment on the European markets amid global growth concerns and trade war fears collaborate to the downside in the higher-yielding oil.

Further, broad-based US dollar rebound amid widespread risk-aversion on the back of a broader market sell-off, further weighed down on the USD-sensitive oil.  Markets now eagerly await the US API crude inventories report due at 2030 GMT for fresh direction on the prices.

WTI Technical Levels