MAs Keeping Oil Bearish Despite Red Sea Problems
The decline in crude Oil has stalled for about a month, however, it continues to keep the bearish trend overall, which started in September, with US WTI crude falling below $68, when buyers stepped in November and the support level at $70 was broken. The price surged above $76 by the middle of December as the USD turned bearish again on dovish FED remarks, but sellers returned at the 200 SMA, reversing the price down and keeping crude Oil bearish.
The tensions in the Middle East continue, which should have turned the price bullish, but the global economic slowdown is keeping the pressure to the downside. Oil buyers have been attempting to put up a fight from time to time, but moving averages continue to act as resistance at the top, particularly the 200 SM (purple) on the H4 chart. Oil jumped to $73.60 yesterday as it was reported that Iran-backed Houthis launched their largest round of strikes yet on cargo ships in the Red Sea leading to the Suez Canal.
However, the 200 SMA acted as resistance again and stopped the climb, so buyers failed once again. Later in the US session, the EIA released its weekly inventory numbers, which showed a surprise buildup, aiding the bearish reversal back toward $70 again. According to the EIA, US crude oil stocks increased by 1.338 million barrels, compared to the expected 675K reduction, reducing the previous week’s 5.5 million barrel decline. The price low for the day stalled just ahead of the 61.8% retracement of the move up from the December 13 low.
Weekly Oil Inventory Data from the US EIA
- Crude oil inventories +1338K vs -675K expected
- Prior was 5503K
- Gasoline +8029K vs 2489K exp
- Distillates +6528K vs +2382K exp
- Refinery utilization -0.6% vs -0.8% exp
- Production 13.2 mbpd to 13.2 mbpd
- Impld mogas demand: 8.33mbpd vs 7.95mbpd prior
API data released late yesterday:
- Crude: -5.215 million
- Gasoline: +4.896 million
- Distillates: +6.873 million
US WTI Crude Oil Live Chart
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