Crude Oil Dropped As U.S. Crude, Gasoline And Distillate Inventories Rose

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Crude Oil Dropped As U.S. Crude, Gasoline And Distillate Inventories Rose

Yesterday, crude oil prices experienced a decline of -0.7%, settling at 7109, as market sentiment was influenced by a mixed bag of supply data and demand outlook. The EIA report revealed a significant increase in U.S. crude inventories, surpassing market expectations with a rise of 5.8 million barrels to 457.3 million barrels. This unexpected buildup in inventories exerted downward pressure on prices, reflecting concerns about oversupply in the market. On the demand side, OPEC maintained its optimistic outlook, predicting robust fuel usage during the summer months and reaffirming its forecast for relatively strong growth in global oil demand for 2024.

Despite ongoing geopolitical risks, the organization sees no change in its projections, anticipating a rise in world oil demand by 2.25 million bpd in 2024 and by 1.85 million bpd in 2025. However, the supply side presents a different picture, with the U.S. EIA revising its estimates for U.S. crude oil output upwards for this year and the next. The agency anticipates a slight increase in production, forecasting output to reach 13.21 million bpd in 2024 and 13.72 million bpd in 2025. Additionally, the EIA revised its price forecasts upwards, reflecting expectations of strong global oil inventory draws and ongoing geopolitical uncertainties.

From a technical perspective, the market witnessed long liquidation, indicated by a significant drop in open interest by -13.61% alongside a decline in prices. Crude oil is currently finding support at 7071, with a potential downside test towards 7032. Conversely, resistance is anticipated at 7159, with a breakthrough potentially leading to further testing of 7208 levels.

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