Crude Oil churns on Tuesday, but losses limited after steep API drawdown

• Crude Oil briefly found fresh highs on Tuesday before falling back.
• WTI tested above $83.50 per barrel before easing back to $82.50.
• API reported a steeper-than-expected drawdown in US Crude Oil supplies.

West Texas Intermediate (WTI) US Crude Oil briefly clipped into a nine-week peak just shy of $84.00 per barrel on Tuesday before mid-US session market flows pulled barrel bids back down to $82.50. 

Crude Oil markets continue to be bolstered by ongoing tensions in the Middle East. The Israel-Palestinian Hamas conflict continues to roil energy markets as investors remain concerned that a cross-border spillover of the conflict would involve direct action from Iran, which backs Hamas and would threaten Crude Oil supplies and logistics stability in the region.

The American Petroleum Institute (API) noted its steepest week-on-week US Weekly Crude Oil Stocks in nearly two years; API barrel counts noted a weekly decline of -9.163 million, far below the forecast -150K drawdown and adding to the previous week’s -3 million barrel decline.

Despite the sharp downturn in Crude Oil stocks, WTI bids remain constrained on Tuesday’s low end after the API also noted a 2.468 million uptick in Gasoline counts as refiners prepare for the summer travel peak. Distillate inventories declined -740K for the week ended June 28, and US Crude Oil stocks at the Cushing facility still rose 404K barrels.

WTI technical outlook

WTI has broken north of near-term consolidation around the $81.50 region, but intraday bullish momentum failed to breach $84.00 per barrel. WTI is primed for a near-term pullback to median bids at the 200-hour Exponential Moving Average (EMA) at $81.28. 

After a bullish breakout from near-term consolidation, WTI is drawing a potential bearish signal as topside momentum remains thin and US Crude Oil trades just north of the 200-day EMA near $79.00.

WTI hourly chart

WTI daily chart