Crude Oil turned bearish in June last year as central banks picked up the pace of rate hikes, heading the global economy toward a recession. But, the decline stalled and US WTI crude formed a support zone above $70, while the 50 SMA (yellow) and particularly the 100 SMA (green) were acting as resistance at the top, pushing the highs lower, which showed that the pressure was still to the downside.

Crude Oil peaked shortly above the 100 SMA last week, but reversed down again and it has been declining pretty fast in the past three days, with WTI dropping below $66/barrel yesterday as the decline accelerated following the Credit Suisse troubles. The decline in Oil prices is due to a combination of factors, including lower growth forecasts, increasing Oil supply, and financial instability caused by the collapse of SVB bank last week and Credit Suisse this week.

The International Energy Agency (IEA) reported that oil inventories have increased, driving Oil supply to an 18-month high. Additionally, the EIA released a weekly report showing that US crude stockpiles showed a larger build-up than expected.

As a result of these factors, the sentiment in the oil market has turned bearish, causing US Crude (WTI) to break support at the key psychological level of $70.00, shortly dipping below $66 yesterday. The stochastic indicator has slipped into oversold territory as the bearish momentum continues, and prices ended up around 5% lower on the day.

• Crude oil build 1.555M versus 1.188M estimate
• Gasoline sees a drawdown of -2.061M versus an estimate of -1.820M
• Distillates see a draw of -2.537M versus estimates of a draw of -1.172M
• Cushing stocks show a draw of -1.916 million versus previous -0.89 million
• Refinery utilization 2.200% versus 0.3% expected. Prior +0.2%
• Weekly crew production 12.2 million barrels versus 12.2 million last week

The private data yesterday showed:

US WTI Crude Oil Live Chart