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Will Oil Head Lower on Larger Inventories Buildup, After the Jump in API Yesterday?

Posted Wednesday, October 26, 2022 by
Skerdian Meta • 1 min read

Crude Oil hasn’t been able to make a proper bullish reversal since the bearish trend started in June, as the FED and other central banks started raising interest rates in a hectic manner. Despite the USD turning weaker and attempts to reverse crude Oil higher, the main trend still remains bearish.

The 200 SMA (purple) has turned into resistance for the US WTI crude Oil, rejecting the price several times. Yesterday we saw a jump as the USD turned bearish and the price moved above the 200 SMA (purple). Although it retreated back down again so this moving average is standing as resistance for the time being.

US WTI H1 Chart – The 200 SMA Remains As Resistance

Will the bearish trend resume again soon?

Besides central banks raising rates pretty fast this year, another reason for the bearish momentum in Oil has been the softening in the global economy, which is heading into a recession, as this week’s manufacturing and services reports showed. A sign that Oil wants to be bearish is the fact that last week we didn’t see any decent bullish moves on a larger-than-expected EIA crude inventory buildup.

This week though, chances are that we will see a major drawdown, after yesterday’s 4.52 million barrel decline in API inventories. So, chances are that we will see a bearish move in case of a major drawdown. If something doesn’t go up on good news, it will go down on bad news.