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API Data Puts Big Focus on EIA
Oil prices remain stalled at a key resistance level ahead of the latest EIA inventories data later today. Yesterday, the API reported a 15.4-million-barrel deficit, the largest weekly drawdown since the 1980s. Consequently, the market is now assessing the risk that today’s EIA data confirms such a drawdown, which would be firmly bullish for oil prices. In terms of forecasts, the market is looking for a deficit of -0.9-million-barrel, against the prior week’s -0.6-million-barrel reading. However, on the back of yesterday’s API data, risks are now skewed towards a downside surprise.
OPEC+ Cuts Supporting Oil Prices
Oil prices have been rising steadily recently on the back of further production cuts from Saudi Arabia and Russia. The joint cuts, which have reduced global daily supply by almost 2%, come with the risk of further action with Saudi indicating that it is willing to cut again if needed. Against this backdrop, any downside surprise in today’s EIA data will be firmly bullish for crude, increasing the chances of a breakout above the current resistance level. However, the extent to which oil can rally is not clear given the upward move we’re seeing in USD currently. If USD softens, however, this should pave the way for a fuller move in crude futures.
Technical Views
Crude
The rally in crude prices has seen the market trading up to test the 82.59 level where price is currently stalled. This is a key area for the market and while short term correction is likely here, the focus remains on further upside and an eventual break higher, in line with bullish momentum studies readings. Above here, 93.47 is the next resistance to note.
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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.