Crude oil had its worse day in two months as a surge of gasoline supplies held in U.S. storage tanks signals refiners will need less crude. West Texas Intermediate oil futures slid roughly 2.6 percent and closed at $55.839, while gasoline tumbled to its lowest in almost seven weeks.
The U.S. Energy Information Administration said American gasoline inventories rose by 6.78 million barrels last week, the most since January, overwhelming the estimates of Bloomberg’s survey and overshadowing a third weekly slide in crude stockpiles. Meanwhile, a boosted operating rate in U.S. refineries for a seventh straight week contribute to the excess supplies shunted into storage.
Although U.S. gasoline stockpiles typically expand at this time of year, last week’s increase was “a bigger number than people were looking for,” Craig Bethune, a senior portfolio manager at Manulife Asset Management, said by telephone. “Can’t hide from that.”
Oil price ever topped $59 a barrel last month for the very first time since mid-2015 as production cuts by the OPEC (Organization of Petroleum Exporting Countries) and allied producers such as Russia chewed into a worldwide glut. However, in the meanwhile U.S. shale explorers have been a thorn in the side of the OPEC-led coalition, lifting output on an almost-weekly basis all year long.
Technically, a plummet of oil price has broken the pattern that moving above 20-day moving average, which is considered as a support. If it fails to rally in the next few days, investors can look at the next support level of 54.715.
Another indicator of Ichimoku tells us it’s still in the upward trend for the long-term. After a significant slide, it may find a support from Kijun-sen in the event that it fails to continue its dip.
Chart 1: WTICOUSD Daily
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