Crude Oil dropped after a U.S. government report showed oil supplies fell less-than-expected last week. The EIA said in its weekly report that U.S. crude oil inventories fell by 0.3 million barrels in the week ended May 17, compared to expectations for a decline of 0.8 million barrels. The report also showed that total motor gasoline inventories increased by 3.0 million barrels, compared to expectations for an increase of 0.1 million barrels. Oil prices briefly came off the lows of the session after Federal Reserve Chairman Ben Bernanke said a premature tightening of monetary policy carried substantial risks to the economic recovery. In prepared testimony to the U.S. Joint Economic Committee in Washington, Bernanke said accommodative monetary policy was providing significant benefits to the economic recovery and reiterated that the bank’s asset purchase program will remain in place for as long as is necessary. The U.S. central bank's three quantitative easing programmes have released hundreds of billions of dollars into money markets over the last four years, boosting many commodities including oil, and any sign the easing programmes could end would be bearish for many assets. Tuesday's API data showed a build of 532,000 barrels in U.S. crude stockpiles during the week ended May. 17. Analysts had expected crude stocks to drop 800,000 barrels and gasoline stocks to remain unchanged from a week ago. Now technically market is trading in the range as RSI for 18days is currently indicating 56.19, where as 50DMA is at 5152.94 and crude is trading above the same and getting support at 5256 and below could see a test of 5216 level, And resistance is now likely to be seen at 5347, a move above could see prices testing 5398.

Trading Ideas:

Crude trading range for the day is 5216-5398.

Crude oil dropped after a U.S. government report showed oil supplies fell less-than-expected last week.

U.S. EIA said in its weekly report that U.S. crude oil inventories fell by 0.3 million barrels in the week ended May 17

Prices briefly came off the lows after Ben Bernanke said a premature tightening of monetary policy carried substantial risks to the economic recovery.