WTI tumbles to lows near $56.50 on EIA

• US inventories unexpectedly increased last week.
• WTI drops further to the mid-$56.00s.
• Lower Chinese imports weigh on prices.

Crude oil prices are extending the leg lower on Wednesday and are pushing the West Texas Intermediate to the area of $56.50 per barrel in the wake of the EIA’s report.

WTI weaker post-EIA

Prices of the barrel of the American benchmark for the sweet light crude oil are slipping back to the mid-$56.00s after the US crude oil supplies unexpectedly increased by 2.237 million barrels during the week ended on November 3 vs. a forecasted drop of nearly 2.9 million barrels.

In addition, weekly distillates stocks dropped by 3.359 million barrels and gasoline stockpiles went down by 3.312 million barrels.

Further out, supplies at Cushing rose by 0.720 million barrels.

Despite the ongoing down move, prices of the WTI remain well underpinned by expectations of an extension of the OPEC output cut deal beyond March 2018 and the persistent rebalancing of the oil market, although recent figures showing a slowdown in Chinese imports of crude seem to have poured cold water over traders’ optimism.

WTI significant levels

At the moment the barrel of WTI is down 1.14% at $56.55 facing the next support at $55.66 (23.6% Fibo of $45.58-$57.69) followed by $55.06 (10-day sma) and then $53.75 (low Oct.30). On the upside, a breakout of $57.69 (2017 high Nov.7) would aim for $62.58 (2015 high May 6) and finally $77.83 (high Nov.21 2014).