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Oil sinks ahead of EIA inventory data
Another large inventory build, reported by API on Tuesday, is piling further pressure on oil prices, as we await a more widely followed release from EIA later today.
Estimates suggest we may see a slight drawdown but that’s very much at odds with the near-five million barrel build that API reported. With oil now trading back near the recent lows, we could see a real test of whether there was actually any substance behind last week’s rebound.
WTI Daily Chart
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A break below $50 in WTI crude could be a very bearish signal in the near-term while at the same time likely being influential when it comes to OPEC+ meets to discuss output cuts early next month. It’s just a question of how low we go before traders sit up and pay attention to the cuts. We could see some support around $48 and $46 below, with the December low around $44 being the greatest test.
There are clearly significant forces working in both directions here but two of these – US/China trade war and OPEC+ extension – could be much clearer in a matter of weeks. Barring any clear indication of progress prior to this, a significant move in either direction may come up against resistance.
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Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years’ experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.
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