Key points
- WTI Crude Futures pull back from April highs
- US crude stockpiles drop the most on record last week – EIA
- US credit rating downgrade weighs on risk sentiment
Futures on US West Texas Intermediate Crude Oil extended a pullback from over three-month peak on Thursday, after a US government credit downgrade cooled investor risk sentiment and bolstered the US Dollar.
After hitting their highest level since April 17th, WTI Crude Futures settled more than 2% lower on Wednesday as ratings agency Fitch cut the US’ top credit rating, which reflected potential fiscal deterioration and a high and surging government debt.
Some analysts considered the price slump as an overreaction.
“Oil stocks are still expected to plunge in coming months,” PVM analyst Tamas Varga was quoted as saying by Reuters.
“Yesterday’s dump bears all the hallmarks of an overreaction and order ought to be restored in the near future.”
On the other hand, concerns over oil supply tightness due to considerable OPEC+ output cuts continued to support the market.
Saudi Arabia is expected to extend its voluntary oil production cut of 1 million barrels per day to September at the upcoming OPEC+ meeting.
The latest data by the US Energy Information Administration showed on Wednesday that crude oil stocks had decreased by 17.049 million barrels during the final week of July. It has been the largest inventory drop since records were initiated in 1982. Analysts on average had expected a much smaller decrease – by 1.367 million barrels.
As of 12:01 GMT on Thursday WTI Crude Oil Futures for September delivery were edging down 0.19% to trade at $79.34 per barrel.
At the same time, Brent Oil Futures for October delivery were edging down 0.18% on the day to trade at $83.05 per barrel.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
