Oil: recovering from the large US session drop of 2.5%

WTI rallied on the back of the API data, away from the $47.08 lows to $47.79.

However, the bulls are not out of the woods on that. Previous to the API data, Oil was losing over 2.5% on the back of a number of points as discussed in today's Forex today piece here: Forex today: plenty of events to muddle through, DXY down 0.11% and WTI down over 2.5%

Essentially the Saudis are ok with oil below $50bbls at $45bbls, with the highest optimism for the price at $55.00bbls. 

With $48 giving way earlier, a free fall ensued to aforementioned lows and it wasn't until when the private oil inventory data showed a bigger than expected draw in crude stocks that a fast minor recovery came about.  From here, WTI needs to regain the $48 handle and break through the late April lows to find some neutral ground again. A more bullish scenario would be a break of the 200 daily EMA at $49.20bbls. The Saudis have drawn a line in the oil fields at $45.00 on the downside, but a break lower looks to $42.10 and 13 Nov 2016 low.

The official data from the US Energy Information Administration will fall in on Wednesday morning in the US shift, but for the API, the results were as follows:

• Crude draw 4.158mm (vrs draw of 3.5mm exp) - biggest since 2016
• Cushing draw  215k
• Gasoline  draw 1.93mm (build of 1mm exp)
• Distillates  draw 436k