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WTI crude oil and Brent oil are cautiously higher ahead of today’s US oil inventories report.

The official weekly report from the Energy Information Administration is expected to show a drop of nearly 2 million barrels.

Crude oil dives as API data shows surprise build

But data yesterday from the American Petroleum Institute stunned markets with a surprise 8.1 million barrel build. Like the upcoming EIA data, forecasts had been for a draw of 2 million barrels.

WTI crude oil futures contracts for delivery in August have been range bound since the middle of May, with $32 providing support and resistance at $35 keeping a ceiling on rallies.

Chart: WTI crude oil futures contracts, August delivery

Candlestick graph for WTI crude oil August futures contracts, May 28th 2020

Traders have struggled to find direction: on the one hand, the reopening of global economies will help stimulate demand, but on the other, the world remains awash with excess supply.

Sentiment had already taken a hit yesterday even before the API data, as reports cast doubt over Russia’s commitment to OPEC+ production cuts.

Tensions between the US and China over a new security law for Hong Kong is also weighing on risk-appetite, although so far today oil has continued to find bid.

The API data saw crude oil prices fall over $2 per barrel, while Brent was off over $1.50. If the EIA data confirms that inventories rose again last week, today’s gains could quickly turn to losses.

Chart: Brent oil futures contracts, August delivery

Candlestick price chart for Brent oil August futures contracts

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