Strong Bullish Reversal in Crude Oil, Despite the Buildup in Inventories

CrudeOil turned bearish at the beginning of this week, as the USD kept making gains, while the risk sentiment deteriorated. The 50 SMA (yellow) was acting as resistance on the H1 chart, but it has been broken now after such a strong bullish reversal, which followed a 250 pip decline earlier.

WTI Crude Oil H1 Chart – Moving Above the 50 SMA

The reversal has taken WTI Oil to $90 

The US CPI consumer inflation report came slightly above expectations, posting an 8.2% increase last month, which sent the USD jumping higher and crude Oil around $2.50 lower. But, a reversal in the risk sentiment followed after that and Oil touched $90 just a while ago. This is strange, given that there was a huge buildup in the US EIA inventories which should have sent Oil diving lower.

EIA Weekly Crude Oil Inventories

• US weekly crude oil inventory data
• Largest build since March 2021
• Prior weak was -1,356K
• Gasoline +2,023K vs -1,825K exp
• Distillates -4,853K vs -2,050K exp
• SPR sales were 7,700K last week
• Implied gasoline demand down 1,189K w/w
• Total product supplied demand -1,560K w/w

Late yesterday the API report showed:

• Oil +7,050K
• Gasoline +2,000K
• Distillates -4,560K

This is a big draw but oil is holding up. Yesterday the global Oil demand growth forecasts from OPEC were revised down for 2022 and 2023 by 500k BPD and 400k BPD respectively, which is another negative event for crude Oil. But, the surge continues and the USD is declining at the moment.

US WTI Crude Oil Live Chart