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Crude consolidates after mixed inventory report

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Crude consolidates after mixed inventory report

Crude oil prices edged lower on the open despite a lower dollar, and a better than expected API inventory report released after the bell on Tuesday.  American Petroleum Institute’s report that crude stockpiles dropped 3.7 million barrels in the week ended Aug. 2, was more than the decline of 2 million barrels that analysts had forecast.

Crude oil prices twice tested the 108.90 level but were unable to breach this resistance point as traders rejected these prices.  Demand for products such as gasoline and distillate fuels continue to buoy crude oil prices as refiners continue to run at maximum capacity.

US crude oil inventories declined by 1.3 million barrels from the previous week, but are still near the upper limit of the average range for this time of year. Gasoline inventories increased by 0.1 million barrels last week and are above the upper limit of the average range. Distillate fuel inventories increased by 0.5 million barrels last week and are near the lower limit of the average range for this time of year. On the demand front, products demand over the last four-week period averaged about 19.7 million barrels per day, up by 3.7 percent from the same period last year.

Crude oil prices edged through support near the 10-day moving average at 105.46.  Resistance is seen near 109 while support is seen near 103.  Momentum on crude oil is negative with the MACD printing in negative territory.  The trajectory of the MACD is lower, after the index generated a sell signal in mid-July.  The RSI has declined from overbought levels and is now printing near 53 which is in the middle of the neutral range.

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