Oil rises as US inventories fall to lowest since January

• Oil briefly rebounds after weekly US EIA data showed a large drawdown in stockpiles.
• WTI oil breaks above $83 but faces resistance to break above again.
• The US Dollar Index retreats further, forming a bearish pattern.

Oil prices rose on Thursday as traders digested the release of US crude inventories, which was seen as bullish for near-term prices. Overall, the release showed a sharp drawdown of 6.368 million barrels, putting US inventories at their lowest level since January 19 at 453.6 million barrels. This could trigger some purchases by the US Department of Energy in order to build up reserves again before the next heating season.

The US Dollar Index (DXY) has fallen into a bearish pattern. For the third day in a row, the DXY records lower highs and lower lows on the daily chart. This could point to a dire correction ahead, and with the preliminary release of the US Gross Domestic Product (GDP) on Thursday and the Personal Consumption Expenditures (PCE) Price Index on Friday, catalysts are enough to trigger that breakup.

Crude oil (WTI) is trading at $82.71 and Brent crude at $87.11 at the time of writing.

Oil News and Market Movements: Replenishment

• Inventories of fuel distillates (diesel and jet fuel) at the Asian distribution center of Singapore rose to the highest level since July 2021, according to official data published on Thursday, Bloomberg reports.
• Chinese refiners head to Venezuela in search of cheap oil. Venezuela offers the discount after the United States reimposed sanctions on the South American country.
• Some more details on the Energy Information Administration (EIA) crude oil reserves figure:
  • U.S. Gulf Coast refineries are processing the most crude oil since 2019 ahead of the summer driving season.
  • The 6.368 million barrel reduction in U.S. crude inventories was unexpected – the consensus was for an increase of 1.6 million barrels – as refiners ramp up oil processing after maintenance and exports rise.
  • US exports were above 5 million barrels per day, in a context of strong exports to Europe.

Oil technical analysis: US shoots itself in the foot

Oil prices are about to see some buying pressure as US refiners and traders prepare for the summer season. That always coincides with many trips, whether through airspace (flights) or by car (gasoline). With crude stockpiles recently reduced and near their lowest level of the year, refiners could raise prices.

With geopolitical tensions lingering and US crude oil stocks at low levels, the November 3 high at $83.34 and the $90 area are the first key levels on the upside. A small barrier in the way is $89.64, the October 20 high. Should tensions continue to rise, even the September high at $94 can be expected to become a possibility.

On the downside, the October 6 low at $80.63 is the next candidate for fundamental support level. Below, the 55-day and 200-day simple moving averages at $80.37 and $79.67 should halt the decline.

WTI Crude Oil: Daily Chart