Oil Prices Rejected After the $2 Jump, Despite Lower EIA Inventory
Last month, crude oil prices experienced a bullish trend, with the 50 SMA acting as support, but the trend shifted in July and the 50 SMA has turned into resistance. However, today we saw a $2 bounce from below $75 after the assassination of the Hamas leader in Iran, however, the jump stopped right at the 50 SMA (yellow) and despite a sizeable drawdown in EIA crude inventories, WTI crude has retreated below $77.
Due to a global economic downturn driven by high interest rates from central banks, particularly the Federal Reserve, oil prices turned negative in early July. The slowing Chinese economy has also contributed to the drop in oil prices. Earlier this month, US WTI Crude dipped below $80 before rebounding overnight. As the month progressed, the decline accelerated, ultimately falling below $75 late yesterday. This suggests that a resistance level has formed around $78, potentially indicating a new selling zone for WTI oil.
EIA Weekly US Oil Inventories Report
- Crude oil inventories: -3,436K barrels (compared to -1,088K expected)
- Previous week’s inventories: -3,741K barrels
- Gasoline inventories: -3,665K barrels (versus -1,043K expected)
- Distillate inventories: +1,534K barrels (compared to -1,242K expected)
- Refinery utilization: -1.5% (versus +0.7% expected)
- Oil production: Unchanged at 13.3 million barrels per day (mbpd)
Private API Inventory Report (Previous Day)
- Crude oil: -4,495K barrels
- Gasoline: -1,917K barrels
- Distillates: -322K barrels
Concerns over escalating tensions in the oil-rich Middle East pushed oil prices higher on Monday. The benchmark US West Texas Intermediate (WTI) traded at $77.50 per barrel, up 0.44% from the previous session’s close of $77.16 per barrel. The rise in oil prices came after an incident in the Israeli-occupied Golan Heights, where a rocket attack killed twelve people.
Israel blamed Hezbollah for the attack, raising fears of a broader conflict. This uncertainty led to a $2 spike in WTI prices. However, due to economic weaknesses in China, the US, and the Eurozone, the gains were difficult to sustain, and WTI settled around $2 lower after being rejected at the 50 SMA on the H4 chart.
US WTI Crude Oil Live Chart
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