U.S. crude slump cools, market awaits inventory data

Tue Jul 7, 2015 5:45pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - U.S. crude oil futures steadied on Tuesday after falling sharply a day earlier on worries about Greece's indebtedness and China's stock market losses, although charts indicated renewed selling could push prices into bear market territory.

Traders turned their attention to the possibility of an inventory decline in U.S. crude last week. A Reuters poll found expectations that U.S. government data on Wednesday could show a 700,000-barrel decline. Industry group American Petroleum Institute (API) estimated a drop of nearly 960,000 barrels. [EIA/S] [API/S]

U.S. crude CLc1 settled down 20 cents at $51.98 a barrel, a three-month low, and extending to more than 8 percent its drop since Thursday's close.

Brent LCOc1 settled up 31 cents at $56.85.

Both benchmarks gained in post-settlement trade, after the API suggested the higher-than-expected stockpile drop.

U.S. crude has fallen about 17 percent since its May high of $62.58. Further declines could push it toward the 20 percent sell-off required from the last major peak to constitute a bear market.

More downside momentum could also push it to test the six-year low of $42.03, set in mid-March, technical analysts said.

"There has been a lot of money looking to pile into the short-side, and there have been an accumulation of different triggers to cue that over a short time," said Paul Horsnell, head of commodities research at Standard Chartered in London.   Continued...

A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo December 18, 2014. REUTERS/Thomas Peter