WTI slumps below $57, loses nearly 2% on Thursday

• US oil production remains near record highs, offsets OPEC's output decline.
• Larger-than-expected draw in US crude inventories fails to help WTI.
• Fed's 25 basis points rate cut doesn't convince markets.

Crude oil stayed under selling pressure on Thursday and the barrel of West Texas Intermediate, which advanced to a fresh two-week high of $58.80 yesterday, extended its slide and was last seen losing nearly 2% on the day at $56.75.

Although the weekly report published by the US Energy Information Administration (EIA) yesterday showed a much larger-than-expected draw in crude oil inventories, the positive impact of the data quickly faded away with other data revealing the US production remaining at record highs above 12 million barrels per day.

Is Fed's 25 bps cut enough?

Furthermore, despite announcing a 25 basis points cut to its policy rate, the Federal Reserve refrained from committing to more rate cuts in the remainder of the year, disappointing markets that were hoping for more stimulus. During the press conference yesterday, Fed Chairman Powell said the rate cut was not necessarily the beginning of a lengthy rate cut cycle and revived concerns of the US economy losing momentum, which as a result could weigh on the oil demand outlook.

Commenting on oil's reaction to these developments, "Supply is plentiful and demand growth is showing signs of weakening globally because of trade conflicts, Brexit and other events that tend to potentially weaken economic growth and, hence, oil demand," Victor Shum, senior partner at IHS in Singapore, told Reuters. "There's a lot of oil out there. U.S. output is growing strongly."

Technical levels to watch for