Crude oil traders acted like they had just awakened from a deep sleep on Thursday when they drove the September futures contract into its lowest level since April 26. Prices dropped more than 1 percent after traders finally reacted to the rise in U.S. gasoline inventories that pushed supplies in the U.S. to a record high.
U.S. West Texas Intermediate crude for September delivery settled at $44.55, down 2.10 or 4.50% for the week and there is still one more session before the week-end. Given the bearish momentum into Thursday’s close, sellers could hit the market again even harder, leading to a potentially bearish follow-through move next week.
With the market facing downside risks over the near-term, there is no question that long investors are going to tighten up sell stops under key support areas that when touched off, could trigger a further acceleration to the downside.
After focusing primarily on the ninth consecutive drawdown as reported by the U.S. Energy Information Administration on July 20, traders appear to have gotten a wake-up on Thursday when they realized how big the gasoline supply had grown during the same time period.
The EIA reported a crude inventory drop of 2.3 million barrels in the week-ending July 15, however, total inventory remained near a historically high 519.5 million barrels for this time of the year.
More importantly, total U.S. crude and oil products stocks rose 2.62 million barrels to an all-time high of…