On Thursday, oil dropped 5 percent to two-month lows after the American government announced a weekly crude draw that upset market bulls hoping for bigger declines.
U.S. crude futures broke key technical support they had secured for almost two weeks since a selloff on Britain’s vote to depart from the European Union. Brent crude also lost the most in a session since February as the worldwide benchmark.
Trader at Tyche Capital Advisors, Tariq Zahir said, “Once we got past those levels, it was just longs liquidation all the way.” Zahir trades in crude spreads at the New York-based company.
Oil broke support levels following the Energy Information Administration’s (EIA) statement that revealed crude stockpiles plummeted 2.2 million barrels the week of July 1, just under a 2.3 million barrel drop prediction by analysts.
Though the EIA stated there was a seventh weekly drop in crude stocks, the number it gave was much less than 6.7 million barrel draw mentioned Wednesday by the trade group, American Petroleum Institute.
Partner at energy hedge fund Again Capital, John Kilduff said, “Expectations were high for this report, and they were dashed.”
Article written by HEI contributor Briana Steptoe.