The recent movement in crude oil prices reflects a downward trend, despite the decline in both EIA and API crude inventories last week. Throughout the trading session, WTI futures remained mostly bearish, dropping to a low of $76.80 but they bounced higher after the EIA inventories were published, although the trend still remains bearish.

EIA Crude Oil Inventories

• EIA Crude inventories -2508K vs -543K expected
• Gasoline -235K vs +537K exp
• Distillates -45K vs +824K exp
• Production 13.1mbpd vs 13.1 mbpd prior
• Refinery utilization +1.9% vs +0.7% exp

WTI Oil Chart H4 – The 50 SMA Keeping the Trend Down

The EIA (U.S. Energy Information Administration) crude inventories report for the week showed a larger-than-expected drawdown of 2,508,000 barrels, compared to the consensus forecast of a drawdown of 543,000 barrels. Gasoline inventories also decreased by 235,000 barrels, contrasting with the expected increase of 537,000 barrels. However, distillate inventories fell by 45,000 barrels, less than the expected increase of 824,000 barrels.

The Private API Inventory Report from Yesterday

• API Crude oil inventory -3,104K b
• Gasoline -1,269K
• Distillates +349KJ
• Cushing -601K

Prior to the report, oil prices were trading at their lowest level since February but saw a slight increase to $77.30 immediately before the release of the numbers. Prices edged higher immediately after the report. The private data released late yesterday showed similar trends, with a significant drawdown in crude inventories, a decrease in gasoline inventories, and a slight increase in distillate inventories. It showed a larger drawdown in crude oil inventories of 3,104,000 barrels, along with significant decreases in gasoline inventories and a slight increase in distillate inventories. Cushing inventories decreased by 601,000 barrels according to the private data.

The recent drop in WTI crude oil prices below the March/May lows of $76.80 suggests a bearish trend. A closure below this level would require overcoming further support levels, including the late-February lows of $75.80 and the psychological level of $75.00. However, there has been a pullback higher after the EIA inventories report, coupled with concerns about potential divisions within OPEC. If OPEC experiences a split, it could exert downward pressure on oil prices, potentially leading to a return to December lows near $68 per barrel. This aligns with the calculated target of a head and shoulders (H&S) pattern, further supporting the notion of a downward trajectory in oil prices.

WTI Crude Oil Live Chart