WTI Crude Oil Collapses on Saudi Oil Production – EIA Report Up Next
Arslan Butt • 2 min read
WTI crude oil clawed back to complete the 38.2% Fibonacci retracement at $54.50 after dropping to $52.74 on Tuesday. Recalling our earlier update, WTI Crude Oil Dips – Key Fundamentals Points to Know, the market fundamentals are causing massive selling in WTI crude oil.
- Bloomberg recently reported that the Permian basin (an oil field) of West Texas has drilled 114,000 oil wells in the previous decade. Many of them would turn a profit even with crude prices as low as $30 a barrel, which is putting OPEC nations under massive pressure. That’s why we are seeing another round of sell-off in crude oil.
- US crude oil output has risen by almost 25% this year, to a record 11.7 million barrels per day (bpd).
- The US-China trade war keeps the market uncertain as Trump is looking to hike the 10% tariff to 25% on $200 billion worth products. This has a very high probability of hurting the Chiese manufacturing sector. No manufacturing means less demand for crude oil. Since China is a top importer of crude oil, this sentiment threatens the crude oil bulls.
EIA Crude Oil Inventories
The stockpile report is due at 15:30 (GMT) today and economists are expecting a build of only 2.5 million barrels vs. 10.3 million barrels last week. The American Petroleum Institute (API) announced a surprise crude oil inventory draw this week, of 1.545 million barrels for the week ending November 16.
It’s the first week that witnessed a draw after six weeks of straight builds as reported by the API, which had weighed on oil prices. Let’s see how EIA report plays today.
Key Trading Level: 56.76
Crude oil has completed 38.2% retracement on the 2 -hour chart at 54.50 but the uncertainty still looms which is why it’s better to wait for the EIA report before placing any trade in oil today.
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