Commodity Market: US Crude Oil falls from highs unseen since October 2018 as US Dollar gains, losses limited by sharp inventory drop

Futures on US West Texas Intermediate Crude Oil retreated on Thursday, as the US Dollar added to its value, but still, oil losses were limited by a sharp drop in US crude stocks, signalling continued demand recovery.

The US Dollar registered its sharpest single-day gain in 15 months on Wednesday after the Federal Reserve indicated that it could raise borrowing costs at a much faster rate than anticipated. A stronger dollar makes dollar-priced commodities, including US oil, more expensive for holders of other currencies.

“Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” Edward Moya, senior market analyst at OANDA, was quoted as saying by Reuters.

“The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.”

However, oil losses were restrained by the latest government data on stockpiles. The official report by the US Energy Information Administration showed on Wednesday that crude oil inventories had decreased by 7.355 million barrels during the week ended on June 11th, or at a much sharper rate compared to what analysts on average had anticipated – a drop by 3.29 million barrels. It has also been the largest weekly decrease since the last week of April, as US refinery activity rose to its highest level since January 2020.

An additional supporting factor for the black liquid was a report that showed China’s refinery throughput had surged 4.4% year-on-year in May to an all-time high.

As of 8:23 GMT on Thursday WTI Crude Oil Futures were edging down 0.32% to trade at $71.92 per barrel, while easing from yesterday’s 140-week high of $72.99 per barrel. WTI Crude Oil Futures have risen 8.41% so far in June, following another 4.31% surge in May.

At the same time, Brent Oil Futures were edging up 0.22% on the day to trade at $74.00 per barrel, while easing from yesterday’s 112-week high of $74.94 per barrel. Brent Oil Futures have risen 6.58% so far in June, following another 4.20% surge in May.

Daily Pivot Levels (traditional method of calculation) – WTI Crude Oil Futures

Central Pivot – $72.25
R1 – $72.89
R2 – $73.63
R3 – $74.27
R4 – $74.91

S1 – $71.51
S2 – $70.87
S3 – $70.13
S4 – $69.39

Daily Pivot Levels (traditional method of calculation) – Brent Oil Futures

Central Pivot – $74.21
R1 – $74.57
R2 – $75.31
R3 – $75.67
R4 – $76.04

S1 – $73.47
S2 – $73.11
S3 – $72.37
S4 – $71.64