Crude Oil Update: Expected EIA Stock Build Favors Current Trading Range

WTI AND UK OIL CRUDE OIL ANALYSIS

• Prices will be impacted by the anticipated increase in EIA’s weekly crude oil inventory.

• WTI oil strengthens the trading range due to announcements of production reductions.

• Brent crude oil is getting close to the point where a triangular pattern is symmetrical.

OIL Inventories Are Anticipated to Increase More, Impacting Prices

With a big rise in oil storage last week, US crude oil reserves are projected to climb much further. From the beginning of November 2022, there has been a significant increase in oil stock buildup, which may be a sign of reduced oil demand as the Fed tightens financial conditions throughout the year’s second half.

Weekly Change in EIA Crude Oil Inventories

While revised given the significant labor (NFP) and economical print (services ISM) that followed, yesterday’s FOMC minutes maintained the message that the Fed thinks it appropriate to continue raising rates despite acknowledging the “disinflation process has begun.” Tighter financial conditions and sluggish global growth directly impact the demand for the commodity.

(16:00 GMT) US EIA Crude Inventories Data

Analysis of WTI crude oil

The WTI price remains inside the wider trading range established in December last year. The range first became visible between $82.50 and $70. Russia claimed that plans to reduce oil shipments from its western ports by 500,000 barrels per day are expected to expand up to 25% in March, which has caused WTI to trade modestly higher following yesterday’s more than $2 fall. Inferentially, the lower supply boosts oil prices, even if only temporarily.

Support continues to be found around about $70, the middle point of the $67-$72 “SPR replenishing” zone, while resistance is $82.50. The long-term interest rate, now at $77.40, maybe an approximate indicator of a climb into resistance or a subsequent decline toward support.

Daily WTI Crude Oil Chart

Analysis of Brent crude (UK oil)

The technical posture of Brent crude oil is slightly different; it resembles more of a symmetrical triangular pattern, which is often a neutral pattern. While the triangular pattern might conclude in any direction, it is often analyzed in light of the previous trend, which was undoubtedly the downward trend that started after March 2022.

Traders should be aware of support and resistance when price movement rapidly approaches the convergence of the lines of support and resistance. The ascending trendline continues to act as support, followed by a zone of support at $76. In contrast, the descending trendline continues to act as resistance, with a possible breakthrough bringing the $89 zone of resistance into focus. The MACD indicator suggests that momentum is tilted downward.

Daily UK Oil Chart