Oil Resumes Downtrend This Week After Pushing Higher All Month
Crude Oil was on a steep downtrend for several months, from the end of September until early December, with US WTI crude falling below $68, where buyers stepped in, as the price approached the support zone. The price increased above $79 until Tuesday, but then reversed back down and ended the week $4 lower, heading to $70.
US WTI Oil Daily Chart – Rejected by the 50 SMA
WTI crude Oil is trading at the day’s lows, down around $2.50 to $71.40s. Half of the gains have already been erased, and Crude ended $2 down for the week. The decrease in Oil comes despite a large decline in the weekly EIA crude Oil inventory report that was released on Thursday, as shown below:
EIA Crude Oil Inventories for the Week
- Crude Oil Inventories: The actual crude oil inventories are reported at -7,114K barrels, which is significantly lower than the expected (-2,704K barrels). This suggests a larger-than-expected decrease in crude oil stocks.
- Gasoline: Gasoline inventories are reported at -669K barrels, which is a decrease. The actual figure is lower than the expected increase (+208K barrels).
- Distillates: Distillates inventories increased by +741K barrels, slightly higher than the expected increase (+600K barrels).
- Refinery Utilization: Refinery utilization increased by +0.9%, surpassing the expected increase of +0.2%. This indicates a higher percentage of refinery capacity being used.
- Production: Crude oil production is reported at 13.3 million barrels per day (mbpd), unchanged from the prior figure.
- Implied Mogas Demand: Implied mogas (motor gasoline) demand is reported at 9.17 mbpd, which is higher than the prior figure of 8.75 mbpd.
Crude Oil was overbought on the daily chart this week, after making another leg higher, but the 50 SMA (yellow) rejected Oil and the reversal lower has been steep, with WTI plunging to the lowest levels since December 18. A lower weekly close has brought about the end of a 3-week winning streak that had followed an 8-week losing streak. This would also signal that the bearish trend is resuing again, particularly if sellers push the price below $70 next week. The next target for crude Oil would be the top of the support zone at $67, then the bottom of the support zone at $64. The market appears unconcerned by the Red Sea.
US WTI Crude Oil
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