Crude oil continues lower today for third day in a row, giving up over two dollars to 51,07 The selloff intensifies as we are approaching the closing bell. The Energy Information Administration announced earlier that the commercial crude oil inventories in the U.S. increased by 2.2 million barrels for the week ending June 7. The recent positive developments in the USA – Mexico conflict boosted a relief rally to oil benchmarks around the globe, but the outlook for the crude oil market has darkened as IEA predicted a significant supply deficit in the 2Q of 2019 even as it acknowledged some cracks in demand. The previous week API report, showed that crude oil stocks in the USA grew by 3.5 million barrels in the week ending May 31, the EIA announced that commercial crude oil inventories rose by 6.8 million barrels in the same period compared to economist’s’ estimate for a draw of 0.8 million barrels. The Baker Hughes Energy Services showed that the total number of active oil rigs dropped to 789 from 800 last week and helped crude oil preserve its daily gains. Meanwhile, OPEC+ expected to roll over the oil supply cut of 1.2 million barrels per day beyond June.
Black gold is in bearish momentum as the previous week has breached all the major daily moving averages and also today breached all the key hourly moving averages after the US CPI report. Crude oil immediate support stands at 50.50 the low from June 5th if the price breaks below, the selloff will intensify and we might test the yearly low from early January at 46.90. On the upside first resistance stands at 20 hour moving average at 51.99 while next resistance stands at 52.85 where the 50 hour moving averages crosses. All in all it looks that the relief rally is over for crude oil and the bearish scenario is back.