WTI approaches $46 on higher than expected draw in crude inventories

Crude oil prices gained traction, with the barrel of West Texas Intermediate rising nearly $1 after API reported a larger than expected draw in crude oil inventories in the U.S. As of writing, the barrel of WTI is trading at $45.75, up 3% on the day.

According to API’s Weekly Statistical Bulletin, crude oil inventories in the U.S. decreased by 8.13 million barrels on a weekly basis, below the Reuters' expectation of 2.9 million barrels. Furthermore, gasoline inventories fell by 801,000 barrels while Cushing stocks dropped a little over 2 million barrels. Today's data may have ramped up the expectations of a larger than expected crude draw in tomorrow's weekly EIA report as well, allowing a sharp upsurge in crude oil prices. After decreasing by 6.3 million barrels in the previous week, EIA is expected to announce a 3.2 million barrels contraction for the week ending July 7.

On the other hand, OPEC's rising production levels could cap the earnings in crude oil in the upcoming days. In fact, Saudi Arabia's daily production reached 10.7 million bpd in June, passing its quota for the first time since OPEC's output cut agreement started in January.

Technical outlook

$46.50 (Jul. 6 high) could be seen as the first resistance for the barrel of WTI ahead of $47.30 (Jul. 4 high) and $48.40 (Jun. 6 high). On the downside, $45 (psychological level) aligns as the first technical support followed by $43.85 (daily low) and $43 (psychological level).

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