U.S. Crude Could Break $90 as OPEC, Weekly Stocks and Dollar Weigh By

© Reuters.

By Barani Krishnan

-- U.S. crude’s long-held support of $90 may be the next to crack.

The front-month for U.S. West Texas Intermediate, or WTI, crude hit a six-month bottom, or its lowest since Feb. 24, as it fell to $91.82 a barrel on Wednesday. With just three days into August, the U.S. crude benchmark has lost 6.5%, adding to the back-to-back drop of more than 7% for July and June.

“There’s a consensus building on the market that WTI’s $90 support could snap in the coming days and that $100-$105 could be the new normal of resistance,” said John Kilduff, founding partner at New York energy hedge fund Again Capital.

The last time WTI traded below $90 was on Feb. 21, when it hit an intraday bottom of $89.08. That was just before the Russian invasion of Ukraine on Feb. 24 that upended global commodity supplies and sent WTI to $130 by March 7.

By 12:00 PM ET, WTI’s front-month was at $92.16, down $2.26, or 2.4% on the day.

London-traded Brent, the global benchmark for crude, was also below the key $100 per barrel level, down $2.34, or 2.3%, on the day. 

Wednesday’s slump in crude prices came as oil exporters alliance OPEC+ agreed on a nominal production increase for September, after a hike of 50% from June levels for July and August. 

Also weighing on WTI was a surprise jump in U.S. crude stockpiles for last week, with a mammoth 4.5 million barrels being added to inventories — virtually replacing everything that was drawn down a week earlier, according to data from the Energy Information Administration. The market had expected a decline of 630,000 barrels instead.

Gasoline balances also rose last week, by 163,000 barrels against a forecast draw of 1.61 million and the previous week’s decline of 3.3 million.

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