Oil drops further on bearish API report; Fed, EIA data eyed

Oil benchmarks on both sides of Atlantic continues to extend losses and now drops for the fifth consecutive session, after API inventory data surprised markets to the downside.

EIA inventory report, FOMC decision in focus

Currently, both crude benchmarks are down nearly 1.40%, with Brent holding 49 barrier, while WTI trades near 47.80 levels. Oil prices dived deeper into the red this session as the Asian traders react negatively to an unexpected rise in the US crude reserves, as reflected by the API report released late-Tuesday.

The American Petroleum Institute said late on Tuesday that US crude reserves expanded by 1.2 million barrels in the week to June 10, surprising markets on the downside as markets had predicted a fall of about 2.3 million barrels.

Moreover, lingering Brexit concerns also continue to weigh on the investors’ minds, therefore, curbing appetite for risky assets such as oil. Looking ahead, markets eagerly await the EIA stockpiles report due later today, especially after the bearish API report, for fresh cues on the supply-side scenario.

The EIA report will be released later on Wednesday, with expectations of a decline of 2.26 million barrels. Besides, the main risk event remains the Fed interest rates decision, which is expected to have significant impact on the USD price-action, eventually influencing dollar priced-in oil.