WTI drops to test the week's lows, bears eye break of critical support

• US oil is falling in a hard hourly spike in New York.
• Oil stockpiles were reported to have dropped by 1.5 million barrels.

WTI is falling in New York losing over 2% at the time of writing and has scored a low of $67.60 so far, dropping from a high of $69.86.

In recent trade, oil stockpiles were reported to have dropped by 1.5 million barrels to 423.9 million barrels in the week ended Sept. 3, the Energy Information Administration said.

Supplies were about 6% lower than the five-year average for this time of year.

Markets were expecting a decline of 4.6 million barrels, according to Investing.com. A week earlier, inventories slid by 7.2 million barrels.

The EIA said gasoline supplies decreased by 7.2 million barrels, about 4% below the five-year average for this time of year.

This compares to last weeks data whereby gas stockpiles increased by 1.3 million barrels. Distillate fuel inventories fell by 3.1 million barrels, about 12% below their five-year average, compared with a decline of 1.7 million barrels a week earlier.

Meanwhile, crude imports dropped by 500,000 barrels per day last week to an average of 5.8 million barrels. Imports averaged about 6.2 million barrels a day over the past four weeks, 12% above the prior-year print.

Gasoline production was 10.1 million barrels, up from 9.9 million barrels a week earlier, while distillate output was 4.2 million barrels, decreasing from 4.8 million previously.

Meanwhile, global mobility is also firming.

Analysts at TD Securities explained that this is fueling a binge in Chinese oil demand as gasoline output soars, with domestic refiners raising runs to meet local demand.

''After all, the potentially devastating delta-variant risks to global energy demand have proved benign, as China's 'Zero-Covid' strategy managed to quickly contain the outbreak, while lockdowns are being rolled back in Asia, supporting higher global mobility and fueling the ongoing recovery in energy demand.''

Meanwhile, the analysts noted that Hurricane Ida is still crippling output in the Gulf Coast, but said the upside for energy markets resides in supply risks, with ''Iran’s new government signalling a hardline approach by dramatically increased production of highly-enriched uranium, while Libya's newly formed interim government readies for a scheduled election this year.''

WTI technical analysis

The price is testing the daily support and pressured below the daily dynamic resistance. through the 69 figure.

A break of support of the $67 figure opens risk towards $65.