WTI drops below $56.50 after weekly EIA stock report

• Weekly EIA data showed  larger-than-expected draw in US crude inventories.
• API on Tuesday also reported drop in US crude oil stocks.
• Easing concerns over prolonged US-China trade war help oil prices stay in green.

Although the weekly data published both by the American Petroleum Institue (API)  and the Energy Information Administration (EIA) this week showed larger-than-expected draws in the US crude oil inventories, the barrel of West Texas Intermediate (WTI) struggled rise sharply.

On Tuesday, the API announced that crude oil stocks in the US fell by 3.5 million barrels compared to analysts’ estimate of 1.9 million barrels. Today, the EIA reported that crude oil inventories declined by 2.73 million barrels in the week ending August 26 versus the market expectation for a draw of 1.9  million barrels.

With the initial market reaction to the EIA data, the WTI dropped to a session low of $56.15 but didn’t have a difficult time recovering some of its losses. As of writing, the WTI was trading at $56.50, still adding 0.85% on the day.  

The upbeat market sentiment following the latest headlines surrounding the US-China trade conflict seems to be helping to ease concerns over a dismal energy demand outlook and allow crude oil prices to trade in the positive territory. Moreover, German Finance Minister Scholz today said that they were currently practising with expansive budget policy to revive hopes of the government taking decisive measure to counter a possible recession and provided an additional boost.

Technical levels to watch for