Crude Oil has continued to struggle at key resistance over the last week or two and we are starting to still see signs of a supply glut potentially easing.

In late US trade, API oil inventories showed a surprise build of 7.29M barrels. That put some downward pressure on CL Futures, which have been struggling to push through the major $57 and $58 levels.

There are reports that the supply glut from OPEC is starting to unwind thanks to agreements to cut production targets. There was commentary recently from Goldman Sachs suggesting that the excess supplies should be cleared by April, which could mean some upward pressure at that point.

However, as we know with the US now a key producer, OPEC aren’t yielding the market powers that they once used to.

There is also the flip side of the equation, which is concerns around demand against a backdrop of worldwide economic worries. We are already seeing worrying signs out of China and despite a market rally in the US, fears around trade remain.

Oil is clearly highly correlated to US equity markets and the bounce that we’ve seen since December has been on the back of a big stock market bounce.

The Technical Picture

As mentioned, the $57 and $58 levels continue to hold down price in the short-term.

Today in the US session, we are going to see the release of the official EIA data where we are expecting a build of 1.2M barrels, so significantly less than we saw from the API number.

A bigger build would surely make those resistance levels a whole lot stronger.