Oil falls 5% hitting a two-month low

Oil prices fell down 5% to two-month lows after the US government reported a weekly crude draw within analysts’ forecasts that disappointed market bulls expecting larger declines.

Brent crude also lost the most in a session since February as the global benchmark. Brent crude futures settled down US$2.40, or 4.9%, at US$46.40 per barrel. That was the biggest percentage loss for Brent in a day since February 9.The session low of US$46.15 marked a bottom for Brent since May 11 and tripped the technical support of US$46.69 held since June 27.

US crude futures broke broke key technical support they had defended for nearly two weeks since a selloff on Britain’s shock vote to exit the European Union. US crude futures settled down US$2.29, or 4.8%, at US$45.14. They hit a two-month low of US$44.87 earlier, tripping the June 27 bottom and support of US$45.83.

Oil broke support levels after the Energy Information Administration (EIA) said crude stockpiles fell 2.2 million barrels for the week to July 1, just below a 2.3-million barrel decline forecast by analysts in a Reuters poll.While the EIA reported a seventh weekly decline in crude stocks, the figure it gave was far less than a 6.7 million-barrel draw cited by trade group the American Petroleum Institute in preliminary data issued.

Oil has risen more than 70% from 12-year lows of around US$27 for Brent and US$26 for US crude in the first quarter, driven by unexpected supply outages from Nigeria to Canada that are now being resolved.

US gasoline inventories also fell less than expected, slipping by 122,000 barrels according to EIA, versus forecasts of a 353,000-barrel draw. That added to fears of a gasoline glut.

US gasoline futures hit four-month lows, settling down 5% at US$1.3631 per gallon.