WTI jumps to fresh daily highs in post-settlement trade post-API data

Crude oil prices gathered momentum in the post-settlement trade on Tuesday with the barrel of West Texas Intermediate spiking up to a fresh session high at $47.83. As of writing, the barrel of WTI was trading around $48, gaining 0.4% on the day.

According to the data released by the American Petroleum Institute, crude inventories in the U.S. dropped by 9.2 million barrels (vs. market estimate of a decrease of 3.1 million barrels) in the week to August 11 to 469.2 million. Underlying details of the report showed that crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.7 million barrels while the refinery crude runs advanced by 7,000 barrels per day.

• United States API Weekly Crude Oil Stock dipped from previous -7.839M to -9.2M

Although the initial knee-jerk reaction pushed crude oil prices higher, they struggle to make a decisive recovery as today's data doesn't ease concerns over the rising OPEC production. Moreover, the demand side for crude oil doesn't look healthy either. "Chinese oil refineries operated in July at their slowest daily rates since September, official data showed. The drop was steeper than expected, raising concerns over the state of Chinese demand and the level of domestic stocks," Reuters said in a recent article on Tuesday.

• OPEC data is said to show compliance with cuts at 87% in July - Livesquawk

Tomorrow, the EIA is going to release its official weekly crude oil stock data, which is estimated to come in at -3.176 million barrels. Even if tomorrow's data shows a larger-than-expected draw in inventories, the barrel of WTI might find it difficult to start a sustainable bullish correction.

Technical outlook

Unless the barrel of WTI makes a daily close above the $50 handle, it could struggle to extend its gains. $50.40 (Aug. 1 high), $51.05 (May 22 high) and $52 (May 25 high) could be seen as target levels above that level. On the downside, supports align at $47 (psychological level/daily low), $46.35 (Jul. 25 low) and $45.40 (Jul. 24 low).