US commercial crude oil inventories dropped sharply by -12.8M barrels in the week ending June 21. That’s a much larger decline than expectation of -2.7M barrels. At 469.6M barrels, crude oil inventories are about 5% above the five year average for this time of year.
WTI crude oil jumps sharply to as high as 59.84 after the release. It’s now in a strong resistance zone between 60.03 and 61.8% retracement of 66.49 to 50.64 at 60.34. We’d be cautious on strong resistance from there to limit upside. However, as there is upside re-acceleration above 55 day EMA, further rise would remain expected as long as 58.14 support holds.
Sustained break of 60.34 will pave the way to retest 66.49 resistance. This will also add to the case that rise from 42.05 is resuming. Though, break of 58.14 will suggest rejection by the 60.03/34 resistance zone and turn near term outlook bearish for 50.64 support again.