Crude oil prices are on the defensive ahead of this morning’s EIA oil inventory report release and after a much larger than expected crude oil build reported by the API late yesterday afternoon. The global oil market remains in a battle of views.

On one hand there is the group that says the global oil market rebalancing is already underway versus those who are still expecting the significant global surplus to linger well into 2016 and likely to the at least the end of 2016.

The market has been trading in a choppy sideways trading pattern since hitting a bottom around the third week of August. The choppy pattern is driven by bouts of short covering driven by the perception of the market being in a rebalancing pattern view only to get hit with rounds of selling as the reality of more and more data points continue to hit the market suggesting that the surplus is not diminishing anytime soon. Last night’s API data showing a US crude oil build of 7.1 million barrels per day is an example of the bearish data points that continue to emerge.

Currently the market is once again setting up for a test of the lower end of the trading range and could gain momentum if today’s more widely followed EIA oil inventory report shows a similarly larger than expected crude oil inventory build as did the API data report.