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The cost of WTI crude oil dropped by $3.02, reaching a final price of $69.51 due to the oil market’s anticipation of another economic crisis. The cause of this downturn was primarily due to central bank increases and the conflicting reports on US reserves.
Oil sales began soon after the opening of oil futures for the day, as per the API data indicating a build-up of products. Although the official EIA data was comparatively better, it was inadequate to stop the decline momentum. Consequently, the bulls gave up, which led to the final $1 of selling resulting in a decline for the day.
During the highest two months of the driving season in the US, the oil bulls will be eager for indications of stronger demand.
During July, Saudi Arabia will decrease its production by another 1 million barrels per day, and the sale of US SPR will conclude. This action is likely to push the market towards a more constricted position. However, most of this expectation is already considered by the market. Consequently, it would require some significant and unexpected development to lower the cost of oil from its current level of $65.
Although oil and natural gas have both dropped by 4% in the FX market, the Canadian dollar is remaining stable at a near 9-month peak.
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