FxWirePro: WTI likely to decline further; sell at correction

Our calculations at FxWirePro suggests that further downside remains open for West Texas Intermediate (WTI) crude price, as near term supply outweighs demand growth.

• While the International Energy Agency (IEA) reduced its oil demand growth forecast to 1.2 million barrels per day, the production has been rising in the United States, and Russia - world’s two biggest oil producers. Earlier this month, U.S. oil production reached a record high of 12.3 million barrels per day, while Russia produced 11.13 million barrels per day in May, up 0.65 million barrels per day from a year ago.
• The inventory has also been rising in the United States, over the past couple of months. Since September, the U.S. inventory level has reversed its steady decline and the level is higher by more than 80 million barrels.

Trade idea:

• Downside targets for WTI are as follows - $56.6, $54.4, $54, and $50 per barrel. The downside call is in line with the longer-term bearish trend. Selling is recommended at a correction of around $60.3 and $61.3 area.