WTI retraces EIA-inspired spike, looks to settle below $56
- EIA says crude oil inventories fell by 10 million barrels in US.
- Fears over global economic slowdown continue to weigh on crude oil.
- Brent oil clings to gains above $60 handle.
After posting strong gains on Tuesday, crude oil prices stretched higher earlier today. With the weekly crude oil data published by the US Energy Information Administration (EIA) showing a sharp fall in the US crude oil inventories, crude oil prices extended their rally. The barrel of West Texas Intermediate touched its highest level in a week $56.70 and the barrel of Brent rose to $60.97.
In its weekly publication, the EIA said crude oil inventories fell by 10 million barrels per day, compared with analysts' estimate for a draw of 2.1 million barrels, and provided a strong boost to crude oil prices.
Risk aversion hurts crude oil
However, concerns over a global economic slowdown and its potential negative impact on the energy demand outlook continue to make it difficult for crude oil to continue to gather strength.
After inverting with the 3-month US Treasury bond yield for the first time in 12 years on Tuesday, the 30-year Treasury bond yield extended its slide and touched a fresh record low today, reviving fears over a recession in the US and forcing investors to stay away from risk-sensitive assets. Furthermore, the data published from Germany on Tuesday confirmed the economic contraction in the second quarter.
As of writing, the WTI was trading at $55.57, losing 0.13% on the day while the barrel of Brent was up 0.4% on the day at $60.30.
Technical levels
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
