The 50 SMA Keeping Oil Bearish Despite Large EIA Inventory Draw
Crude Oil has resumed the bearish trend which started in late September, with US WTI crude plunging below $68, when buyers came in as the price approached the support zone. The price rose beyond $76 late last week as the USD was falling, but sellers returned at moving averages which continue to keep crude Oil bearish.
Crude Oil spiked higher by more than $1 on Wednesday after a bomb assault in Iran which left 103 dead and 141 injured. However, yesterday it turned lower in the European session yesterday after touching the $74 level, as markets retreated from earlier highs after US EIA numbers revealed a decline in inventories but also showed a significant increase in refined product reserves. Oil prices surged higher on Wednesday after news that Libya’s 300,000 bpd El Sharara field production had been shut down due to ongoing protests that began the day before.
While it was a relatively minor amount in global terms, it served as a reminder of the tight market balance for Q1 and signaled the threat to additional production fields, notably in El Feel, if the demonstrations spread. But, the 50 SMA (yellow) acted as resistance once again, rejecting the price yesterday, which ended up around $3 lower.
US Weekly Crude Oil Inventory Data from the EIA
- Weekly EIA crude oil inventories -5,503K vs -3,725K expected
- Prior crude oil inventories were -7114K
- Gasoline +1,090K vs -215K exp
- Distillates +1,009K vs +588K exp
- Refinery utilization +0.2% vs -0.1% exp
- Production-100K to 13.2 mbpd
- Impld mogas demand: 7.95Mbpd
Late yesterday, the API reported:
- Crude Oil inventories -7418K
- Gasoline inventories +6,913K
- Distillates inventories +6,686K
However, the turn of the year is a time of low demand for driving since a lot of people take the holidays, making it difficult to analyze the numbers. This data shows massive product accumulation as refineries worked hard and demand fell over the holidays. The main question for the future is the US output figure. If it exceeds 14 mbpd this year, oil will be in trouble.
US WTI Crude Oil Live Chart
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