WTI Crude Oil Dips Below $71: Rising US Stockpiles and Demand Concerns Weigh on Prices

But the decline in gasoline and distillate fuel inventories was a little bit of a buffer for the market. The drawdown in refined products shows demand for gasoline and diesel is still there, just not enough to offset the bearishness of the crude inventory build.

#OOTT #WTI
"The headwinds for the current rebound"
Theoretically, all three elements should be moving in tandem to sustain the rising price action. The tepid underlying data could derail the rebound without timely improvements.

— WTI Trading Group- 🇺🇸 US Crude Oil Trader🛢️🌎 (@DB_WTI) October 22, 2024

Geopolitical and Economic Factors

Geopolitical tensions in the Middle East are still a major factor for oil markets. As Israel continues to operate in Gaza and Lebanon, market participants are watching diplomatic efforts to calm things down. Any big news out of the region will cause volatility in crude prices as the Middle East is a major player in global oil production.

China’s recent stimulus measures, including a cut in benchmark lending rates, has given the market some hope. As the world’s biggest oil importer, anything good for China is good for global oil demand. But concerns remain about the sustainability of China’s recovery, especially with lockdowns and industrial activity slowing down.

Inventory Build and Surplus

The API report has everyone worried the global oil market will be in surplus for the next few quarters. Demand is okay for now but the rise in US crude inventories and the reduced expectations for US rate cuts has everyone worried the market will go into surplus. If demand from big economies like China and the US weakens, that will put more pressure on oil prices.

And the Fed’s interest rate stance is still a factor. Expectations for big rate cuts have dwindled and the US dollar is stronger. Since oil is priced in dollars, a stronger dollar reduces demand from foreign buyers and adds more pressure to crude oil prices.

WTI Crude Climbs Toward $71 Amid Rising Israel-Iran Tensions

With fears of supply disruptions growing, investors are on edge.

Meanwhile, China’s new stimulus offers hope for demand, but will a potential oil surplus and fading Fed rate cut bets shift the market?#OilPrices… https://t.co/SWR2NCUaTX pic.twitter.com/nUDUTDNXal

— The Private Banker (@leprivatebanker) October 22, 2024

Daily Technical Outlook: WTI Crude Oil – October 23, 2024

WTI crude oil is at $71.58 as of Wednesday after the rise in US crude inventories. Support is at $71.24 and then $70.60. Below these levels and it’s $69.24. Resistance is at $72.07 and then $73.10.

The RSI is at 65 so the market is getting overbought. The 50-day EMA is at $70.60 and prices have bounced off this level recently.

Key Points:

• Resistance is at $72.07, then $73.10 and $74.25.

• Support is at $71.24, $70.60 and $69.24.

• RSI at 65 means the market is getting overbought and may pull back.

This technical outlook means the market is supported but the inventory build may cap the gains and lead to a consolidation in the short term. Watch the support levels and geopolitical news for more cues.