Oil inventories surge: USD strengthens as crude drops to $56.34

WTI crude oil has plummeted $0.80 (1.4%) to $56.34 following unexpectedly bearish EIA inventory data. While crude inventories drew down by 3.832 million barrels versus an expected build of 447,000 barrels, the report revealed massive product builds that overshadowed the headline draw. Gasoline inventories surged by 7.702 million barrels, more than double the expected 3.186 million build, while distillates jumped 5.594 million barrels against expectations of 2.109 million. These substantial product builds signal weakening demand outlook and will likely pressure crude consumption going forward. The bearish inventory report is strengthening the US dollar against commodity-linked currencies, with USD/CAD gaining 0.5% as Canada's oil-dependent economy faces headwinds. Technical indicators suggest WTI could test support at $55.50, with further downside targeting the $54.00 level if product inventories continue building at this pace.