Crude Oil Revitalized to New Highs for the Year

Posted Thursday, September 28, 2023 by
Skerdian Meta • 2 min read

More than two months ago, crude Oil began a slow increase, which later developed into a very strong bullish trend. Buyers have been coming in at every dip, and smaller moving averages are functioning as support on the daily chart above, indicating that buying pressure is strong. Crude Oil had taken another drop by the middle of August, but it found support and turned around just at the 50 SMA (yellow) on the daily chart.

With rising Oil consumption, global energy production is anticipated to stay below supply/demand equilibrium unless output is raised. It is anticipated that the current daily crude supply undershoot is roughly 2 million barrels. But Saudi Arabia and Russia have extended their 1.3 million bpd output cut through the end of 2023, and Russia is adding to price pressures by banning Oil shipments outside of Russia.

Weekly EIA oil inventory data for the week of September 22, 2023

Crude oil inventories for September 22 week -2.170M versus -0.320M estimate
Crude oil inventory draw of -2.170M vs -0.320M estimate. The private report showed a draw of -1.6 million barrels.
Distillates build of 0.398M vs -1.298M estimate. The private report showed a drawdown of -1.7 million barrels.
Gasoline build of 1.027M vs -0.120M estimate
Refining capacity -2.4% versus -0.4% expected
Cushing inventories -0.943M versus -2.064M last week
production unchanged at 12.9 million barrels

Crude oil was trading at $92.61 just before the release. The price is little changed post the data. Looking at the chart of the inventory data going back to February, the drawdowns have been much larger indicative of strong demand.

Earlier this month WTI crude oil prices climbed above $90/barrel ash the prices keep surging and they continued higher yesday, propelled by an unexpected drop in US petroleum reserves. WTI hit a 13-month high of $94.20. The Energy Information Administration (EIA) crude oil inventories revealed a surprising dip in US crude oil reserves, with the national supply falling by more than 2 million barrels, compared to the -320K anticipated.

The 20 SMA (gray) has also been supportive of WTI Oil, pushing the price upward, finally reaching $92 on Tuesday last week, as Saudi Arabia and other OPEC+ members reduced supply. On Tuesday the 20 SMA (gray) held the decline as the price retreated and we saw a bounce off this moving average