Crude Oil Ending Up Below $70, Despite EIA Inventories Drawdown

Crude Oil has been bearish for about a year, although it seemed like it was going to make a breakout of the downtrend and a bullish reveal after the surprise production cuts by OPEC+ in April. Buyers pushed WTI crude to the 200 SMA (purple) on the daily chart, but that moving average turned into resistance and rejected the price. So now instead, Oil is looking bearish again and has fallen by over 13%.

This drop was due to the failure of oil bulls to break through key technical levels, with the 200-day moving average and the 1 December high at $83.32 preventing further price increases. This drop below $80 was a big blow to the upside momentum. The return of banking turmoil has brought back concerns surrounding global growth and has put sellers back in control.

US WTI Oil Daily Chart – The 200 SMA Held As Resistance

Crude Oil heading for March lows

Although demand conditions are expected to improve and supply is expected to tighten, the current chart does not look promising for oil prices. The next key line in the sand for oil prices is the 200 weekly moving average at $66.85, followed by the November 2021 low at $62.46. It is best not to fight the market sentiment and to let it pass before making any moves. Buyers could potentially lean on the highlighted levels above, but it is important to keep an eye on the technicals. The EIA inventories declined last week, but that didn’t help crude Oil at all.

US Weekly EIA Petroleum Inventory Data for the week ending April 28

• Weekly crude oil inventories -1280K vs -1100K expected
• Prior was -5045K
• Gasoline +1743K vs -1157K exp
• Distillates -1191K vs -1084K exp
• Refinery utilization -0.6% vs +0.3%

API data released late yesterday:

• Crude -3,939K
• Gasoline 400K
• Distillates -1,000K

The SPR released 2 million barrels last week. The data isn’t as bullish as the API report late yesterday but it’s not like the market cheered on the API number anyway. It’s been a brutal week for the oil bulls with crude down another $2.83 to $68.80 today, which is the lowest since March 24.