WTI Crude Hits $77.79: U.S. Inventory Drop Fuels Price Surge

In the latest trading session in Asia on Wednesday, oil prices increased, driven by a significant drop in U.S. crude inventories that exceeded market forecasts.

Brent oil futures for August climbed slightly by 0.2% to $82.09 a barrel, while West Texas Intermediate (WTI) futures saw a 0.3% rise to $77.79 a barrel.

This uptick follows reports from the American Petroleum Institute (API) indicating a substantial inventory reduction of 2.4 million barrels last week, surpassing the anticipated 1.8 million barrel draw and marking a reversal from the previous week’s 4 million barrel build.

Anticipation Ahead of Economic Data and Fed Decision

Despite the positive momentum, the gains in oil prices were tempered by market anticipation for upcoming U.S. economic data and a crucial Federal Reserve meeting scheduled later in the day.

The market is especially attentive to the Fed’s stance on interest rates, with expectations leaning towards maintaining the current rates. This scenario is set against a backdrop of sticky inflation and strong labour market data, which might discourage the Fed from reducing rates soon.

Notably, similar restraint has been seen in recent monetary policies by major central banks, including a rate cut by the European Central Bank earlier this month.

Global Demand Outlook and Market Speculations

Oil markets are also closely watching the global demand forecasts by major agencies. The Organization of Petroleum Exporting Countries (OPEC) has reaffirmed its strong demand outlook for 2024, hinting at potential supply deficits in the coming quarters.

Meanwhile, the International Energy Agency (IEA) maintains a more conservative stance on demand projections. This divergence in outlooks could significantly influence market dynamics, especially if the IEA report, expected soon, suggests adjustments to global demand estimates.

Given these developments, investors and traders in commodities such as gold and oil should stay alert to the implications of these economic indicators and policy decisions, which could impact not only the prices of these commodities but also broader market sentiment.

This vigilance is particularly relevant given the potential shifts in monetary policy and economic recovery trajectories globally.

WTI Crude Oil Price Forecast: Technical Outlook

USOIL is trading at $78.32, marking an increase of 0.25%. The current pivot point at $77.52 is crucial for today’s trading session. Resistance levels are observed at $78.86, $80.59, and $81.89, indicating potential upper targets should bullish momentum continue.

Conversely, support levels are found at $76.56, $75.64, and $74.47, providing barriers against price drops. Technical indicators signal a bullish outlook. The Relative Strength Index (RSI) is at 69, nearing overbought territory but still suggesting upward price potential.

The 50-day Exponential Moving Average (EMA) at $76.48 supports this bullish sentiment, with current prices trading above it. A drop below the pivot point of $77.50 could trigger a sharp selling trend, so traders should monitor this level closely as a key threshold for maintaining the current bullish stance.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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