Oil snaps advance despite more than forecast drop in US inventories
U.S. crude inventories slipped by 6.8 million barrels in the week ended June 5, the EIA report showed. Analysts predicted a 1.5 billion barrels drop.
The prices faced resistance after hitting a peak of $61.80 a barrel as investors deemed the fall in U.S. crude stockpiles temporary and the market still suffers from oversupply.
Mainly, the driving season boosts demand on oil in the summer months as drivers take advantage of holidays in the United States and Europe.
Therefore, the fall in the build of U.S. crude oil stocks is logic, and investors predict to see downside pressure once again.
OPEC members decided last week to hold their production quota despite the oversupply in the oil market.
Oil and other commodities have benefited from the retreat in the dollar for a third straight session versus a basket of major currencies.
The dollar index plummeted to a low of 94.29, compared with session’s opening at 95.10 on worries from the U.S. officials regarding the strength of the green currency and its impact on the economy.
Although crude oil futures for July delivery retreated, but still trades above the session’s Pivot Point located at 59.80, where the RSI 14 momentum indicator hovers above the 50 line.
Resistance at $62.20 may halt any further rise in crude prices, while the pivot point and support line represent a shield against any drop.
Brent crude also retreated from a high of $66.34 a barrel to trade around $65.65.