Brent crude oil futures testing key level of technical support

Crude oil futures' grip on a key level of technical support was being tested ahead of the release of key industry data on the state of US inventories.

As of 1150 BST, front month Brent crude oil futures were skidding 1.76% lower to $46.10 a barrel on the ICE, alongside a drop of 1.79% for futures on West Texas Intermediate.

According to technical analysts at Web Financial Group UK, a close below $46.64 per barrel for Brent futures on daily price charts might open the floodgates to further selling in the near-term.

However, analyst Jose Maria Rodriguez added that the safest course of action would be to wait for a break of that level on weekly price charts.

Nevertheless, he conceded that the technical backdrop for oil had taken a turn for the worse.

Contrary to standard finance theories, technical analysts believe past price patterns for financial securities can help predict future moves.

The American Petroleum Institute was scheduled to report its weekly tally of US oil and gasoline stockpiles later in the same session, after the close of markets in London.

Official figures from the US Department of Energy would follow the next day.

Weighing on sentiment, market commentary was referencing research from analysts at Morgan Stanley according to whom oil and product stockpiles in the OECD, China and certain non-OECD countries had in fact increased by about 1.0m barrels per day over the first three months of 2017.

In a report published the day before, but dated 16 June, Morgan Stanley also said the Organisation of Petroleum Exporting Countries' stated aim of cutting excess global oil inventories was likely to prove elusive for some time to come.

Increasing supplies of Libyan oil were cited by some observers as another factor that was weighing on prices.

According to a sourced report from Reuters, Libya's oil production increased by more than 50,000 b/d to 885,000 after the state oil company settled a dispute with German outfit Wintershall.