Crude Oil: EIA On Watch After Huge API Inventories Build
Oil Inventories On Watch
Oil prices are a touch softer today after a fresh rally yesterday, likely linked to uncertainty after the API reported a huge 7.1 million build in commercial crude stores, helping temper concerns around supply levels. Focus will now turn to today’s headline EIA data set which is forecast to show a 1.6-million-barrel drawdown. If seen this should keep oil prices supported while an upside surprise, echoing the API data, could see fresh downside materialise, particularly if accompanied by a rally in USD on the back of the FOMC later today.
Middle East Tensions Rising
Away from inventories data the market remains broadly supported by the ongoing conflict in the Middle East. The recent attacks on Saudi infrastructure by the Houthis, leading to the temporary closure of the East-West pipeline, are a worrying development and suggest higher oil prices are likely to remain near-term. Indeed, with ongoing (and rising) risks linked to transit through the Strait of Hormuz and the Red Sea, supply from the Middle East is expected to remain tight and oil prices are unlikely to find any meaningful downside unless we see a fresh ceasefire and return to negotiations from the US and Iran.
Technical Views
Crude
The rally in crude has seen price trading up to test above the 104.26 level, now fast approaching a test of the next resistance level above at 108.73. With momentum studies bullish focus remains on further upside while price holds above the 95.06 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.