- WTI crude oil prices have skyrocketed in recent trading, with a focus on EIA inventory data and geopolitics.
- The US benchmark for light sweet crude has rebounded sharply from a brief dip below $ 42.00
WTI Crude Futures have been oscillating in recent trading, dipping below $ 42.00 initially following a mixed weekly inventory report from the EIA, but then picking up sharply again to $ 42.20 as attention turned to a possible escalation of tensions between the United States and Iran. WTI futures maintain daily gains of 50 cents, or more than 1.0%
Mixed crude oil official inventory report, geopolitics in focus
In contrast to API inventory data on Tuesday, the official EIA report did not record a much larger than expected rise in crude stocks. In fact, construction was more modest than expected at 0.768 million barrels (the consensus was for a construction of 1.65 million barrels). Following up on the bullish aspects of the report, Distillates also saw a much larger than expected draw of more than 5 million barrels (consensus was for a 1.457 million draw).
However, returning to the more bearish aspects of the report, both Cushing and Gasoline saw larger-than-expected builds and weekly U.S. crude oil production jumped sharply to 10.9 million barrels per day from a rate of 10.5 million. barrels per day last week.
Given that the big jump in US production, coupled with the fact that Tuesday’s API data had already pointed to the possibility of a larger-than-expected draw in Spirits, the bears initially pushed the WTI below $ 42.00.
However, at the same time as the above inventory data was released, news broke that US Secretary of State Pompeo will impose new sanctions on Iran, which could put oil exports under further threat. already severely restricted in the country. This news has likely helped the recent strong recovery in WTI above $ 42.00.
Concerns that the Trump administration may act more recklessly on Middle East politics in recent days has possibly been a factor supporting oil prices. Indeed, news broke Tuesday that US President Donald Trump was convinced not to launch a military strike against Iranian nuclear facilities.
Technical outlook remains bullish after pennant breakout on Tuesday
WTI broke to the upside of a short-term pennant structure on Tuesday (see four-hour chart) and is now testing longer-term trending resistance in the $ 42.20 region. The WTI bulls will look for a move back to the day’s high around $ 42.70 and perhaps a test of last Wednesday’s highs around the $ 43.00 psychological level.
On the downside, support in the form of the day’s lows resides at $ 41.82 and below that, the descending trend line of the recently broken WTI pennant structure should offer support in the $ 41.20-30 region.
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