WTI retraces daily gains on surprise build in US crude stocks

Crude oil prices came under pressure, pushing the barrel of West Texas Intermediate towards the $46 mark in the post-settlement trade after API reported a larger than expected build in crude oil inventories in the U.S. 

After decreasing by 8.13 million barrels in the previous week, crude oil inventories in the U.S. increased by 1.6 million barrels according to API’s Weekly Statistical Bulletin, beating analysts' expectations for a draw of 3.2 million barrels in the week to July 14. Further details of the bulletin revealed that crude stocks at the Cushing, Oklahoma, delivery hub rose by 608,000 barrels while gasoline stocks fell by 5.4 million barrels.

Although the barrel of WTI eased to $46.11 on the initial sell-off, it started to pare its losses and is now trading at $46.45, still up 0.45% on the day. Now investors turn their attention to tomorrows EIA inventory figures, which is highly correlated with today API data. In case EIA reports a build in inventories as well, we could see crude oil prices come under pressure again. However, the fact that the greenback continues to lose strength against its rivals could help limit WTI's losses. On Tuesday, the US Dollar Index closed the day at its lowest level in 11-months after Trump's administration's failure to pass the healthcare bill triggered a sharp sell-off.

Technical levels to consider

$46.90/$47.00 (daily high/psychological level) could be seen as the first hurdle for the barrel of WTI ahead of $48.20 (Jul. 6 high) and $50 (psychological level). On the downside, supports could be seen at $45 (psychological level/Jul. 13 low), $44.05 (Jun. 19 low) and $42.75 (Jun. 20 low). 

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