Yesterday’s Bullish Momentum Seems Over for Crude Oil
US crude Oil reversed higher after an unexpected drawdown in crude inventories ahead of next month when OPEC’s two million bpd output cuts are set to materialize. OPEC and its allies, otherwise known as OPEC+, moved to secure price stability in the oil market as prices have been on a steady decline since peaking in June.
This week’s EIA data showed a 1.725m drawdown in crude Oil stocks after a sizeable 9.88m addition in the previous week, resulting in Oil prices receiving a slight lift. But the climb stopped at the moving averages and we saw a reversal from there.
US WTI Oil H4 Chart – MAs Stopped the Climb
The trend has turned bearish for crude Oil
In addition, President Joe Biden announced a plan to sell off the remaining 15 million barrels of the Strategic Petroleum Reserve (SPR) whilst standing ready to supply further reserves early next year if prices are too high. Such a move ought to see a decline in oil prices but it would appear that the rise was the result of short sellers buying to close existing shorts as the news of additional SPR supplies was announced.
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