WTI Moves Lower On Historic Inventory Level
WTI sold off on Wednesday as total crude oil inventory continued to build. The number of barrels in storage around the United States (U.S.) is a historic high, well above 500 million. The data was not all bad, as gasoline stocks showed a significant drawdown (reduction) of 4.642 million barrels, despite the strong outlook for gasoline demand this coming summer. The oversupply conundrum continues to weigh heavy on the market.
The 200 SMA (Simple Moving Average) is currently at $41.99 and has once again acted as a strong level of resistance. The rally is running out of momentum and looks to move down to the first support level of $38.47.
What to expect today?
Key data out of the U.S. and the Baker Hughes Rig Count. Core Durable Goods are forecast to come out below the previous release. This confirms the weakness seen within the U.S. manufacturing sector. Jobless claims are forecast to be steady, any increase will be a worrying sign for the economy. The rig count will be of key interest to traders, as last week's release saw an increase. A further increase in the figure will get the bears back into the market.
U.S. Core Durable Goods Orders (Month on Month) forecast -0.2%
U.S. Durable Goods Orders (Month on Month) forecast -2.9%
U.S. Initial Jobless Claims forecast 268K
Continuing Jobless Claims forecast 2230K
U.S. Services PMI forecast 49.7
Baker Hughes Rig Count forecast 387
The head of International Energy Administration (IEA) stated that an agreement next month in Doha to freeze production will not produce any results. Only Saudi Arabia can resolve the oversupply problem by taking the lead and cutting production.