Oil Prices Falter on Exaggerated US Figures
West Texas Intermediate (WTI) and Brent crude oil faltered Wednesday – the contracts’ first day-on-day declines since July 18.
The September WTI contract shed 89 cents during midweek trading, ending the day at $55.88 per barrel. The light crude marker peaked at $57.64 and bottomed out at $55.33.
Like the rest of the petroleum complex, the September WTI reacted positively to the latest U.S. Energy Information Administration (EIA) report on domestic commercial crude inventories, Steve Blair, senior account executive with the RCG Division of Marex Spectron, told Rigzone. Specifically, the EIA confirmed the weekly American Petroleum Institute (API) crude draw of approximately 11 million barrels per day, he explained.
“However, after traders had time to digest all of the figures, most realized that these figures were exaggerated – particularly domestic crude production, which dropped a whopping 700,000 barrels per day – due to the disruptions caused by Hurricane Barry,” Blair continued. “After that the market gave back all of the gains, and more, as the day progressed. Technically, the market came close to the $55.10 major support seen back from the early June 2019 period and tested major resistance at $57.44, as seen on the daily chart.”
According to a Bloomberg article posted to Rigzone earlier Wednesday, U.S. crude stocks were on track for their sixth consecutive weekly decline.
Brent crude for September delivery lost 65 cents Wednesday, settling at $63.18 per barrel. Blair pointed out that September Brent also fell prey to the EIA report, reacting in the same manner as WTI.
“Futures price tested the major resistance at the $64.11 level but fell back and then tested the $62.82 support but still closed back above this major support level, which also shows its origins in the early June 2019 period,” said Blair, referencing the daily Brent chart. “Further support seen at $61.26.”
Reformulated gasoline (RBOB) also edged downward. The August RBOB contract declined one-half of one cent to settle at $1.855 per gallon. Noting that the August contract will expire on July 31, Blair observed that September RBOB contract prices traded in a wide range Wednesday – from $1.7890 to $1.8385. Nevertheless, he added that September RBOB managed to stay and close within the sideways congested pattern the contract has been in since it broke down on July 18.
August Henry Hub natural gas futures fell eight cents, closing at $2.22. Because the August gas contract will expire on July 29, Blair turned his attention to the September contract.
“Natural gas again, as has ben the pattern for the last month, continues to rise and fall with the changes in weather forecasts as we move closer to the last month of the summer season,” Blair said, adding that prices again broke down through the $2.238 level – which had been the support and again becomes resistance.
“Next support down around the $2.174 level as seen on the daily continuation chart and the $2.166 level as seen on the daily chart,” commented Blair. “We see this market continuing to play this see-saw game for the remainder of the summer as long as the weather forecasts also continue their see-saw forecasts.”
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