Crude oil prices stayed the same at 6,146 despite a stock market selloff due to fears of a U.S. recession. Although the overall market declined, oil prices were somewhat protected by supply disruptions in Libya and increasing conflicts in the Middle East. Asian markets dropped as investors moved away from risky assets, expecting quick interest rate cuts to boost economic growth. Supply issues helped keep oil prices stable, with Libya’s largest oil field, Sharara, stopping production because of local protests.
The ongoing conflict in Gaza and potential retaliations by Iran and its allies against Israel also added to geopolitical risks, supporting oil prices. In the U.S., crude oil inventories fell by 3.436 million barrels for the week ending July 26, 2024, exceeding the expected draw of 1.6 million barrels. This was the fifth consecutive weekly decline in inventories, with each drop being larger than expected. Stocks at the Cushing, Oklahoma delivery hub also fell by 1.1 million barrels, marking the fourth consecutive drop. Gasoline stocks decreased by 3.7 million barrels despite a decline in weekly product supplied. However, distillate fuel inventories unexpectedly rose by 1.5 million barrels due to a sharp drop in product supplied.
Technically, the market is seeing long liquidation, with an 8.75% drop in open interest, settling at 15,013 contracts. Crude oil has support at 6,049 and could test 5,951 if this level is breached. On the upside, resistance is expected at 6,221, with further gains potentially pushing prices toward 6,295.
