U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed while giving back most of their earlier gains. Early in the session, both futures contracts were supported by the American Petroleum Institute (API) weekly inventories report that showed a larger than expected decline in weekly stockpiles.
The U.S. futures contract rallied to its high for the week, but the international-benchmark posted an inside move. This was expected because the API released data on U.S. inventories. Furthermore, the U.S. contract ran into resistance at a key long-term technical level at $59.70, and the Brent contract fell well short of its resistance, the 200-day moving average.
American Petroleum Institute Weekly Inventories Report
The API reported a large draw in crude oil inventory of 5,285 million barrels for the week-ending May 24. Analysts were looking for an 857,000-barrel drawdown. Pricing in this week’s draw, the net build is still bearish, coming in at 26.65 million barrels for the 22-week reporting period in 2019.
The API also reported a build in gasoline inventories for the week-ending May 24 in the amount of 2.711 million barrels. Analysts were looking for a draw in gasoline inventories of 528,000 barrels for the week. Distillate inventories fell by 2.144 million barrels for the week, while inventories at Cushing, Oklahoma fell by 176,000 barrels.
Crude oil prices continued to be underpinned by the OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela. However, gains were limited by worries over a global economic slowdown and lower demand because of the on-going trade dispute between the United States and China.
Today’s U.S. Energy Information Administration’s (EIA) weekly inventories report is expected to show a 900,000 draw. A larger-than-expected decline could trigger a short-covering rally, while an unexpected build would likely drive prices lower.
WTI prices continue to be capped by a major, long-term 50% level at $59.70 and the 200-day moving average at $60.56. The best value area is $55.32 to $52.70.
Brent crude oil resistance is the 50% level at $67.60 and the 200-day moving average at $68.56. On the downside, the best value area is $62.93 to $60.32.
Barring any unexpected news regarding U.S.-China trade relations, the price action today is likely to be dictated by the EIA report.
This article was originally posted on FX Empire
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