U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower late Wednesday, shortly before the release of the American Petroleum Institute (API) weekly inventories report at 20:30 GMT.
Oil prices tumbled early in the session after U.S. President Donald Trump said he was working on a strong response to China’s proposed security law in Hong Kong and as some traders doubted Russia’s commitment to deep production cuts.
Later in the session, U.S. Secretary of State Mike Pompeo said he had certified that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, a blow to its status as a major financial hub.
But those aren’t the concerns late in the session on Wednesday, traders want to see if the API numbers will show a third consecutive weekly draw.
Oil Prices Jumped after Last Week’s API Report
On May 19, the American Petroleum Institute (API) reported a large crude oil inventory draw of 4.8 million barrels for the week-ending May 15.
WTI was trading up in the afternoon on May 19 prior to the API’s data release, but the day had already seen a two-sided trade, then back to a gain as the demand picture turned a bit rosier than it has been over the past few weeks.
Oil production in the United States has now fallen from 13.1 million bpd to March 13 to 11.6 bpd for May 8, according to the Energy Information Administration – a drop of 1.5 million barrels.
The API also reported a draw of 651,000 barrels of gasoline for the week-ending May 15 and distillate inventories were up by 5.1 million barrels for the week, while Cushing inventories saw a draw of 5 million barrels.
Today’s API report is expected to show another drawdown of about 2.5 million barrels. A steady to better reading could launch crude oil higher into the late session close.
A bad report will sent prices lower. The upside momentum seems to be slowing so I anticipate any sell-off to lead to a substantial near-term correction.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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