Crude Oil Continues Its March higher, Despite the Buildup in Inventories

The recent performance of crude Oil has been quite remarkable, with a strong upward trend since July. This has led to Oil prices reaching their highest levels since November 2022. In particular, WTI crude oil has demonstrated resilience, with moving averages acting as support, holding the price during retreats lower on the H4 chart and other timeframes. Despite the initial lack of excitement stemming from the news that Saud Arabia will continue to keep the cap on, the situation has taken a significant turn for the better, showing impressive momentum.

The current surge in Oil prices is notable for surpassing the highs from back in April. This comes after a striking turnaround on Tuesday, which occurred despite a more negative overall market sentiment. WTI crude fell below $80 but the rebound was substantial, with a climb from a low of $79.97 to a closing point just below the $83 threshold. We caught that move, opening a buy Oil signal ner the lows.

As Oil continues its upward movement today, technical analysis indicates that there is still room for further gains. This potential is enhanced by a tighter market situation, suggesting that this rally could extend further, giving the recetn price action. yesterday we saw a major buildup in EIA inventories, but Oil continued to march higher. So, the previously mentioned forecasts of Oil reaching $90 annd probably $100 don’t seem too optimistic.

EIA Weekly US Crude Oil Inventories

• EIA weekly US crude oil inventories +5,851K vs +597K expected
• Prior week was -17,049K (a record draw)
• Gasoline -2,661K vs -8K expected
• Distillates -1,706K vs +6K expected
• Refinery utilization +1.1% vs 0.4% expected
• Production estimate 12.6 mbpd vs 12.2 mbpd prior
• Impld mogas demand: 9.30 mbpd vs 8.84 mbpd prior

This one is tough to square because refineries are running harder but inventories of products continue to fall. There is suspicion growing in the market that finished product inventories are headed to multi-year lows and commercial oil inventories are as well.

API data released late yesterday:

• Crude +4067K
• Gasoline -413K
• Distillates -2093K

WTI crude today is trading at the highest since last November, breaking above a series of tops in the $80-$83 range. The close today and on the weekly will be critical. The EIA says the big jump in US production last week was due to a rebenchmarking, which could be a shift of some condensate classifications into crude.

US WTI Crude Oil Live Chart

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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