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  • WTI remains on the defensive amid renewed concerns over global outlook. 
  • The US API reported a surprise drop in inventories on Tuesday.

West Texas Intermediate (WTI) oil is currently trading in the red near $41.15 at press time, having dropped by over 1.3% on Tuesday. 

US inventories drop

Crude oil inventories fell by 6.829 million barrels in the week ended July 24, the American Petroleum Institute (API) released on Tuesday showed. Analysts had forecasted a moderate inventory build-up of 357,000 barrels following the preceding week’s unexpected rise of 7.544 million barrels. 

However, the surprise drop in inventories failed to put a bid under oil prices during Tuesday’s US trading hours. Asian desks, too, have so far refrained from buying black gold. 

Oil’s failure to cheer the positive inventory data could be attributed to the resurgence of coronavirus cases across the globe and the lingering Sino-US tussle and renewed concerns over the future course of the global economy. 

Global coronavirus cases have exceeded 16 million. Meanwhile, the recent tit-for-tat closures of consulates in Houston and Chengdu marked an unprecedented escalation of tensions between the US and China. As such, the demand recovery path is looking uncertain.  

Oil may remain depressed during the day ahead. The US central bank is widely expected to keep rates unchanged and sound dovish on Wednesday. The black gold may pick up a bid if the Fed’s dovish stance leads to another round of selling in the US dollar. 

Technical levels