WTI drops below $72.50 after a significant increase in US crude stockpiles.
FUNDAMENTAL OVERVIEW:
- WTI prices declined following the API report, which revealed a sharp 9.04-million-barrel rise in US crude inventories—the largest increase in a year.
- However, crude oil prices could find support as concerns over supply grow amid rising geopolitical tensions in the Middle East.
West Texas Intermediate (WTI) crude oil prices have broken a three-day winning streak, trading near $72.40 per barrel during European trading hours on Wednesday. This decline follows a report from the American Petroleum Institute (API), which highlighted a sharp rise in US crude inventories.
According to the API, US crude oil stockpiles surged by 9.04 million barrels for the week ending February 7, far surpassing the anticipated increase of 2.8 million barrels. This marks the largest stockpile build in a year.
Market sentiment remains cautious amid escalating trade tensions and broader economic uncertainty. Concerns have intensified regarding the potential disruption of oil drilling operations that rely on specialty steel not produced domestically, as a result of US President Donald Trump’s steel and aluminum tariffs.
However, crude oil prices may receive support from growing supply concerns due to geopolitical tensions in the Middle East. On Tuesday, Israeli Prime Minister Benjamin Netanyahu stated that the ceasefire would end, and Israel would resume “intense fighting” in Gaza if Hamas did not release hostages by Saturday noon, as reported by the BBC. US President Trump also urged Israel to end the ceasefire if hostages were not returned by the weekend.
Adding to the uncertainty, concerns regarding Russian and Iranian oil supplies persist due to ongoing sanctions. US measures imposed last month on tankers, producers, and insurers have disrupted Russian oil shipments to China and India. Furthermore, new sanctions have targeted networks facilitating Iranian oil exports to China as part of Trump’s renewed “maximum pressure” campaign.
CRUDE OIL TECHNICAL ANALYSIS CHART:
Technical Overview:
Crude Oil is trading within a up channel.
Crude Oil is moving above 10&20 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 72.80
Immediate support level: 72.14
HOW TO TRADE CRUDE OIL
After a sharp rise, crude oil prices were rejected and aggressively reversed downwards, breaking a key support level. Currently, prices have pulled back to a resistance level and are facing rejection again. If crude oil remains below this resistance, the downward trend is likely to continue.