Since the beginning of the month, the price of crude oil has dropped more than $5.00 based on positive US economic data that has made the dollar stronger and oil less attractive to international buyers.
Tomorrow, the commodity is likely to drop further following the US Crude Oil Inventories figure, set to be released at 15:30 GMT. Typically, a surplus in US stockpiles means that the price of oil will go down, as it means that demand is down in the world’s largest crude oil consuming country.
Analysts are predicting tomorrow’s figure to come in around 2.2M, which if true, would signal a slight drop from last week’s figure of 2.6M. While this might lead some traders to believe that demand is going up in the US, and they should therefore go bullish on oil, 2.2M is still a very positive figure.
Given oil’s bearish trend over the last week, and the USD’s overall renewal in strength, it may be wise for traders to continue to short the commodity. At the same time, should a significantly smaller than expected inventories figure come in tomorrow, and especially if the number turns out to be negative, the price of crude may stage an upward correction for the rest of the week.