The EIA reported a weekly inventory increase of 700,000 barrels for gasoline
Oil prices have been losing ground for the sixth day in a row on Thursday. Brent crude plunged below the $66 figure to register fresh three-month lows around $65.90 before bouncing slightly.
The market is pressured by COVID-19 cases rise, a stronger dollar, and a surprise increase in U.S. gasoline inventories. The Energy Information Administration on Wednesday reported that U.S. crude inventories fell by 3.2 million barrels last week.
The EIA reported a weekly inventory increase of 700,000 barrels for gasoline, while distillate stockpiles fell by 2.7 million barrels. The data also showed crude stocks at the Cushing storage hub edged down by 1 million barrels for the week.
Oil futures were also strongly pressured by a widespread rally in the greenback. The dollar jumped on Wednesday to extend the ascent today after the FOMC meeting minutes showed that most officials thought it was appropriate to begin reducing the pace of asset purchases this year.
Also on the negative side, daily crude processing in China fell to its lowest in July since May 2020 as independent plants slashed production high inventories and weakening profits. China’s factory output and retail sales growth also slowed sharply and missed expectations in July, adding to demand concerns.
If the selling pressure persists in the short term, Brent crude could target the $65 figure. On the upside, the immediate resistance is now represented by the $66.40 region, followed by the $67 level. In a wider picture, the technical picture has deteriorated substantially this week as the futures fell back below the 20-week SMA that arrives around $70.30. Furthermore, the RSI on the weekly timeframes is pointing lower but is yet to enter the oversold conditions, suggesting there is still more room to the downside.