Crude oil prices were consolidating around $85 per barrel, showing minimal reaction to yesterday’s surge in API inventories. But today they have tumbled lower, with WTI crude down by $2,50 with the release of official EIA inventory data also helping in the decline.

The current price action in crude oil indicates a market in need of a breather, despite significant geopolitical tensions in the Middle East between Israel and Iran. Although there is considerable risk in the region, the market has not experienced a sustained rally. Nonetheless, overall market fundamentals remain supportive, with expectations for increased economic activity persisting, even as expectations for rate cuts diminish.

WTI Oil Chart Daily – The 20 SMA Has Been Broken

Monitoring technical indicators will be crucial, particularly as crude oil approaches the key $83 support level. A drop below this support zone could signal a reversal in the bullish trend. On the daily chart, crude oil appears to be consolidating with a slight bearish bias, as it approaches the $83 support zone. This area is likely to attract buyers, as it intersects with the trendline, the red 21 moving average, and the 38.2% Fibonacci retracement level. Sellers, however, will be looking for a break below this support zone to invalidate the bullish setup and potentially push the price back toward recent lows.

The weekly EIA oil inventory data

• Crude oil inventories increased by 2.735 million barrels, surpassing the estimated increase of 1.373 million barrels.
• Distillates saw a decrease of 2.760 million barrels, exceeding the estimated decrease of 0.283 million barrels.
• Gasoline inventories decreased by 1.154 million barrels, compared to the estimated decrease of 0.89 million barrels.
• Cushing inventories increased by 0.033 million barrels, contrasting with the previous week’s decrease of 0.17 million barrels.
• Refining utilization decreased by 0.2%, contrary to the expected increase of 0.6%. Last week, it decreased by 0.3%.
• Weekly crude oil production stood at 13.1 million barrels, down from 13.1 million barrels last week.

US WTI Crude Oil Live Chart