|Previous||0.0 Million Barrels|
|Forecast||-1.5 Million Barrels|
|Analysis||Crude oil futures turned lower on Wednesday after spreading the gains yesterday as the sentiment returned pessimistic over the outlook for the global recovery and the European debt crisis.|
Crude oil futures for July settlement trended bearishly from the opening high of $99.41 per barrel near opening levels of $99.33 per barrel, where crude continued south to the low of $98.25 a barrel and currently hovering around $98.70 a barrel.
Downside pressure spread from the downbeat sentiment in Asia today that spread into European markets, as equities open negatively following Asian stocks losses. Risk aversion provided the dollar with gains which intensified the downside pressure on crude that was already weighed south with the reported rise in inventories.
The API yesterday said motor fuel stockpiles 2.44 million last week while demand declined 1.5%. The report comes ahead of the EIA report today that is expected to show crude inventories sank 1.5 million barrels last week after they were unchanged in the previous week.
Crude is correcting the gains seen yesterday that were supported by the recommendations to return to commodities according to Goldman Sachs, which is bullish on crude still. The dollar was further downside pressure on crude as the dollar index moved higher on the weakening risk appetite and the fragile debt-laden euro.
The dollar index moved to the upside to currently trade around 76.22 from opening levels of 75.93. The euro on the other hand slumped heavily versus the dollar to trade around 1.4028 from opening levels of 1.4098 and opening high of 1.4106.
The volatility remains high today with the sentiment shaky still while crude still capable of extending the upside correction. Oil might be pressured lower with the prevailing negativity in the market, yet likely will turn higher with the expected drop in U.S. commercial crude inventories.
Crude stockpiles are expected with 1.5 million barrels drop while motor gasoline inventories are expected to rise by 0.45 million barrels following 0.119 million barrels the previous week which might be negative and offset the upside movement and support from the drawback in crude inventories.