There were rumours of an oil draw in the range of 16 million barrels as early as Friday so when the news was delivered of a record 17 million barrel draw in the US were announced, it may have triggered profit taking. It's a classic case of 'buy the rumor, sell the fact'.
Given that oil is on a five-week winning streak and bumping up against the April high, some profit taking is no shock, though the quick fall to $79.61 is stark. Selling was likely accelerated by the break of the big figure as well.
On the fundamental side, the US backed away from a plan to buy 6 million barrels to refill the SPR, saying it didn't like the offers it received. The broad risk-off move in market is also undoubtedly a factor with the S&P 500 down 1.25%.
The big worry is that Saudi Arabia will not extend its voluntary 500k bpd cut into September or halve it. Market watchers are expecting an announcement today or tomorrow. The fear is that a decision has leaked.
