Oil back under pressure after EIA report-led rally

Crude oil prices failed to extend the rally witnessed following the EIA stock report and the barrel of West Texas Intermediate quickly slipped back below $50 mark. As of writing, WTI was trading at $49.36, down 0.4% on the day.

On Wednesday, the U.S. Energy Department revealed that crude stocks dropped 3.6 million barrels last week and surprised the markets as yesterday's the American Petroleum Institute showed a buildup in its inventories. Further details of the EIA report displayed a higher capacity utilization by refineries, suggesting that the pace of production output is likely to continue to accelerate in the U.S. "We're running a slight deficit and starting to eat into inventories but not by any meaningful amount," Tanya Andrien, vice president of strategic development at Drillinginfo, told Reuters.

Furthermore, after cutting its production to 10 million barrels a day in March, Saudi Arabia, OPEC's biggest producer, fell behind Russia and Angola as China's supplier and experts are speculating that another OPEC market share battle may be underway, increasing the uncertainty surrounding a possible extension to production output cut deal.

• Oil: OPEC production cuts to turn into solid oil inventory draws? – Goldman Sachs

Technical outlook

The barrel of WTI is facing the immediate hurdle at $50 (psychological level) followed by $50.90 (Apr. 21 high) and $51.30 (Apr. 4 high). On the flip side, a break below $48.90 (Apr. 25 low) could aim for $48 (psychological level) and $47.10 (Mar. 27 low).