Summary:

• API reported a tremendous decline in stocks by more than 10mb
• WTI surges above $48, Brent exceeds $50 a barrel for the first time since early June

The American Petroleum Institute (API) reported a gargantuan draw in oil stocks by 10.23mb compared with a forecast being just below 3mb. It was the largest decline in US inventories since September last year. The data was for the week ending July 21. What’s more, oil stockpiles in Cushing declined 2.568mb. Those numbers along with a pledge of Saudi Arabia that it intends to curb its oil export in August buttressed the commodity prices yesterday.

The sole disappointment came in from gasoline stocks which proved to rise 1.903mb. All in all, the API’s release could be treated decisively favorably for crude prices and an effect might be even more noticeable if the data is confirmed by the DoE report. That reading is expected to come out at 3:30 pm BST today.

At the end let us remind that the DoE’s report showed last week that a level of inventories this year fell below that seen in the last one. That situation took place for the first time for a few years. Even as US inventories are getting lower chiefly due to a seasonal increase in demand for fuel, the oil market becomes under pressure owing to mounting floating stocks, a pick-up in output in OPEC (seen last month) as well as an uninterrupted rise in US productions in spite of the fact the spot price has stayed beneath $50 of late.

WTI prices surged yesterday on the back of a much higher than expected draw in stockpiles. Source: xStation5

Technically, a daily time frame could suggest that we could go towards $50.5/$52 where a more relevant resistance zone is located. Moreover, it’s mentioning that risks related to the DoE’s report could be tilted to the downside for oil prices barring there is even a higher draw.