Oil stabilizes after briefly touching new highs amid steep API drawdown

Crude Oil prices briefly reached new highs on Tuesday, with West Texas Intermediate crude testing above $83.50 per barrel before easing back to $82.50. The American Petroleum Institute (API) reported a steeper-than-expected drawdown in US Crude Oil supplies, with API barrel counts showing a weekly decline of -9.163 million, far below the forecast -150K drawdown.

This is due to ongoing tensions in the Middle East, which investors are concerned could lead to direct action from Iran, which supports Hamas, threatening Crude Oil supplies and logistics stability in the region.

The API also noted a 2.468 million uptick in gasoline counts as refiners prepare for the summer travel peak. Distillate inventories declined -740K for the week ended June 28, and US Crude Oil stocks at the Cushing facility still rose 404K barrels.

The WTI technical outlook suggests that WTI has broken north of near-term consolidation around the $81.50 region, but intraday bullish momentum failed to breach $84.00 per barrel.

WTI is primed for a near-term pullback to median bids at the 200-hour Exponential Moving Average (EMA) at $81.28. After a bullish breakout from near-term consolidation, WTI is drawing a potential bearish signal as topside momentum remains thin and US Crude Oil trades just north of the 200-day EMA near $79.00.