Oil headed back to the $40 handle and August lows?

Oil is lower again after the API data released at the end of the U.S. session, dropping further below the psychological $50.00bbl WTI level and through a key support for October's business.

This week's private inventory data gave us a bigger than expected build 4.8m bbls vs -3.8m prior ahead of Wednesday's official EIA in the US, of whose executive director, Faith Birol, was on the wires via Reuters recently posting optimistic comments on oil markets going forward. However, for the meantime, it seems no non or OPEC member nations are really prepared to cut output, with Russia remaining a dubious cooperator in such an accord while the government is able to tax and generate economic value even at oil prices below $20 per barrel and while so many economies rely and need oil revenue.

Oil is at risk of returning to the lows in August should the US economy continue to grind sideways or deteriorate along with a poor global recovery and the high inventories remain so throughout Q4. $52.22 was the 19th October high and the sideways channel support at $49.55 was broken today with $48.50 a key downside target. Meanwhile, the DXY printed a fresh nine-month high overnight slightly above the 99 handle.