WTI crude fell 58-cents to $44.66 on Tuesday
Oil has struggled to sustain gains and has been in a clear downtrend since hitting a cycle peak on June 9. Continued high US inventories and production have weighed while outages and geopolitical problems have led to intermittent bounces.
Now, WTI is threatening the lowest levels since May 11.
The level to watch is $44.51, which is just a few cents below Tuesday's low. If it breaks, it will open the way to a test of the May low of $43.03.
What determines what will happen next is the weekly petroleum inventory data from API, due at 4:35 pm ET. The API has struggled to predict official government inventories but it remains a market mover. The consensus is for a 1300K draw in government data but there is also a close focus on burgeoning gasoline and distillate levels.
One theme so far this Summer is demand. The expected pickup in driving due to lower prices hasn't materialized. That either speaks to changing consumer habits or a soft economy but either way it isn't good for oil.
In the bigger picture, I think crude has likely topped and will slowly sink back into the $20s.
