Oil prices trended lower this Thursday, extending its losing streak for the sixth consecutive session, primarily on the back of resurgence of oversupply worries in the already saturated oil markets.
The latest EIA inventory report showed that crude reserves in the US expanded by 1.671 million barrels in the period ending July 22, while the market had forecast a drop of 2.250 million barrels.
Additionally, increasing gasoline inventories coupled with rising US oil production levels also exacerbated the pain in the black gold, dragging it to fresh three-month troughs. Many analysts now speculate that this may be the resumption of the broader downtrend in the prices.
Besides fundamentals, the drop in the oil prices can be also justified by the declining trend in the US treasury yields over various time horizons, with the 30-year one highly correlating to the oil price action. The tumbling treasury yields amid an ambiguous Fed outlook on the interest rates for this year, resulted in heavy selling in the greenback across the board. Hence, it can be seen that oil failed to benefit from a weaker US dollar, reinforcing the fact that both the oil and USD index have been out of sync.
While a sudden pick-up in volatility witnessed today amid poor risk sentiment also dented the sentiment around the risk assets such as oil. The CBOE Volatility Index (VIX) rises +0.50% to trade near 13 levels.
Markets now await the US GDP report and rigs count data due out tomorrow for further momentum in the oil prices.
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