WTI plunges below $70.00 in upbeat US inventory report, China’s economy concerns

• WTI slides more than 3% after a rise in US gasoline stockpiles.
• Crude Oil inventories fall by 4.6 million barrels, surpassing forecasts; market sentiment shifts to demand concerns over supply.
• OPEC+ voluntary production cut of 2.2 million barrels for Q1 2024; Saudi Arabia and Russia hint at potential extension beyond March.

The US crude oil benchmark dropped below $70.00 per barrel after a solid inventory report in the United States (US) concerned market participants, outweighing the drawdown in crude stocks. WTI is trading at $69.52, down more than 3%.

WTI at $69.52, down over 3% as robust US inventory report amplifies demand worries; China's economic outlook adds pressure

The US Energy Information Administration (EIA) revealed that US gasoline stockpiles rose by 5.4 million barrels last week, five times the 1 million fall expected by market analysts. Consequently, Crude Oil inventories fell by 4.6 million barrels, exceeding the 1.4 million foreseen.

Sources cited by Reuters said, “There is demand destruction coming in from the fuel side. The market is more demand focused than supply-focused right now.”

Last week, the Organization of Petroleum Exporting Countries and its allies, OPEC+, agreed to take a voluntary production cut of 2.2 million barrels for the first quarter of 2024. During the current week, Saudi Arabia and Russian officials commented that cuts could be extended beyond March.

Oil prices remain on the defensive, spurred by China’s economic recovery as concerns mount, a day after rating agency Moody’s lowered the outlook on China’s A1 rating to negative from stable. In the meantime, further data from China would be revealed, with Oil traders eyeing the release of the Balance of Trade.

WTI Price Analysis: Technical outlook

The daily chart portrays WTI in a downtrend, with bears in full control, after breaching last year’s low of $70.10, which has opened the door for further downside. The next demand area would be the June 28 daily low at $67.10, followed by the latest swing low of $66.85, the June 12 daily low. If those levels are taken out, that will expose the year-to-date (YTD) low of $63.61. On the flipside, if buyers reclaim the $70.00 barrier, that could pave the way to test the November 16 daily low of $72.22.