Oil Prices Fail at MAs Again Despite Large EIA Inventory Buildup
Oil prices have been bullish for about a week, driven by positive sentiment however WTI crude has found resistance at the 100 daily SMA
It seems that despite the positive sentiment in financial markets and the decline in US EIA crude inventories, WTI crude oil prices are facing significant resistance above the 100-day Simple Moving Average (SMA) on the daily chart. The attempt to break above this moving average was thwarted by the 200-day SMA (purple), leading to a reversal lower.
The drop back below the 100 SMA indicates that there may be renewed selling pressure in the market, despite the lower-than-expected US CPI inflation report. This suggests that other factors, possibly technical or fundamental, are influencing the direction of oil prices.
WTI Oil Chart Daily – Buyers Failed at the 200 SMA Today
US WTI crude Oil prices jumped more than $1 higher after the EIA inventories were released, helped by a lower US CPI (Consumer Price Index) report as well. The CPI came at 0.2% in May, lower than expectations of 0.3% and the unrounded number was even lower, closer to 1.5% than closer to 2%. But, the 200 SMA rejected the price in Oil and it reversed back down below the 100 SMA.
EIA Weekly US Oil Inventories:
Key Data Points:
- Crude Oil Inventories:
- Actual: +3,730K (vs expected -1025K)
- Prior: +1,233K
- Gasoline Inventories:
- Actual: +2,566K (vs expected +0.891K)
- Distillates Inventories:
- Actual: +881K (vs expected +2147K)
- Refinery Utilization:
- Actual: -0.4% (vs expected -0.3%)
Private Inventory Data (Prior Day):
- Crude: -2428K
- Gasoline: -2549K
- Distillates: +972K
Interpretation and Implications:
Bearish Inventory Data:
- Crude Oil: The significant build in crude oil inventories (+3730K) against an expected draw (-1025K) is bearish for oil prices. The higher inventory levels suggest an oversupply or reduced demand.
- Gasoline: Similarly, gasoline inventories increased more than expected (+2566K vs +891K), further indicating potential oversupply in the market.
- Distillates: Although distillate inventories rose less than expected (+881K vs +2147K), the overall increase still adds to the bearish sentiment.
Refinery Utilization:
- Decrease in Utilization: The slight decline in refinery utilization (-0.4%) is more than expected (-0.3%), indicating that refineries are processing less crude oil, which can contribute to higher inventory levels.
Crude Imports:
- Highest Since 2018: The increase in US crude imports, reaching the highest level since 2018, likely contributed to the higher-than-expected crude inventory build. This influx of imported oil has added to the supply, leading to the inventory surplus.
US WTI Crude Oil Live Chart
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