Oil prices have turned bearish once again, with US West Texas Intermediate (WTI) crude dipping below $74 earlier today. Although prices have since rebounded by about $1, the market remains under pressure. The drop comes despite reports of a production halt in Libya, which traders are largely dismissing.
Yesterday, the American Petroleum Institute (API) reported a larger-than-expected drawdown in crude inventories, fueling hopes for stronger demand. However, today’s report from the U.S. Energy Information Administration (EIA) failed to meet expectations. The EIA reported a drawdown of just 0.8 million barrels for the week, significantly lower than the anticipated decline of nearly 3 million barrels. This smaller-than-expected decrease has done little to support oil prices.
On Monday, WTI crude oil prices surged over 3%, reaching the $77.50 range, driven by concerns over geopolitical tensions after Libya announced it would reduce oil production and exports due to political disagreements. However, the market quickly reversed course, erasing all of Monday’s gains. The bearish trend continued into today, pushing prices toward the $72 support level.
WTI Crude Oil Daily Chart: Continued Decline After 200 SMA Failure
The WTI crude oil price is currently testing key support levels. The immediate short-term support is just above $74, with additional support at $72.80. Should prices breach these levels, selling pressure may intensify, bringing the $71.50 support zone into focus. This zone has been a critical level since February, holding up against previous declines.
US EIA Weekly Oil Inventories Report
The EIA’s weekly oil inventories report showed mixed results:
Crude Oil: A decrease of 846,000 barrels, much lower than the expected draw of 2.265 million barrels.
Previous Week: Inventory drawdown was 4.649 million barrels.
Detailed EIA Breakdown:
Gasoline Inventories: Decreased by 2.203 million barrels, slightly below the expected draw of 2.265 million barrels.
Distillate Inventories: Increased by 275,000 barrels, contrary to the expected draw of 1.083 million barrels.
Refinery Utilization: Rose by 1.0%, exceeding the anticipated increase of 0.2%.
Oil Production: Remained at 13.3 million barrels per day, a slight decrease from the previous 13.4 million barrels per day.
API Inventory Data Released Yesterday:
Crude Oil: Draw of 3.4 million barrels.
Gasoline: Draw of 1.86 million barrels.
Distillates: Draw of 1.4 million barrels.
This mixed data from the API and EIA has contributed to the ongoing volatility in oil prices, as traders weigh supply concerns against the backdrop of fluctuating demand expectations.