Authored by Arthur Berman via OilPrice.com,
WTI futures fell $2.86 from $53.14 to $50.28 per barrel, and Brent futures dropped $3.81 from $55.92 to $52.11 per barrel. WTI is trading below $49 and Brent below $52 per barrel at the time of writing.
The apparent cause was a larger-than-expected 8.2 million-barrel (mmb) addition to U.S. crude oil inventories.
Over-Reaction
With US crude inventories at record highs and production surging higher, the ongoing oil rig count rise in America (up 8 to 617 - 8th week in a row and highest since Sept 2015) signals more 'problems' ahead for a record level of speculative long positioning in black gold.
When an asset takes out horizontal resistance to the upside, it is nice to see the old resistance tested as new support, before pushing higher.
The S&P 500 traded sideways for nearly 18-months, before breaking out to the upside and then testing old resistance as new support at (1) below. Once this support held, the S&P took off to the upside in short order.
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It's a well-known risk, perhaps the biggest to the global financial system: China's debt is too high, with estimates ranging from 250% to 300% of GDP per the IIF:
Disaffected liberals not willing to pay taxes to a government run by Donald Trump? Families just so flush with cash that they don't need those tax refunds this year? Americans just getting lazier?