Crude oil price is trading off intraday lows after the Energy Information Administration reported a fall in crude oil inventories by 400,000 barrels in the week under review. Markets were expecting a much larger shortfall (-800K), after an inventory build of 3.6 million the previous week.
Crude oil prices maintained the bearish sentiment after it emerged that the US government had tried to pressure the OPEC + alliance to ramp up production after gasoline prices in the US rose to their highest levels in 7 years. Reduced demand for crude oil from the world’s largest importers as the coronavirus delta variant spreads also weighed on sentiment.
Goldman Sachs said on Wednesday that it expects a drop in China’s oil demand by 1 million barrels per day in August and September due to the Covid-19 delta variant. The bank also lowered the global oil demand forecast from July’s 98.4 million barrels per day to 97.8-million barrels per day in August and September.
Crude oil price on the Brent benchmark is down 0.9% as of writing.
After Tuesday’s rebound, the crude oil price is once more pressurizing the 70.01 support. After Wednesday’s violation of this price level, the intraday bounce preserves the integrity of this support. A breakdown of 70.01 also takes out the redrawn trendline, opening the door towards 67.74 initially. A continued decline targets 66.81 and 65.95 additionally.
On the flip side, recovery from a bounce on 70.01 allows for a push towards 71.44. If the price continues to advance, 73.34 and 75.52 become new targets to the upside. However, the bias is for any recovery moves to be rallies amid down-trending prices, allowing for cheaper shorts on crude.