Crude oil price is trading subtly as investors await cues from the STEO report scheduled for release on Tuesday. Depending on the embedded details, the US government may release crude oil from its SPR.
Crude oil price is trading within a tight range ahead of the EIA’s Short-Term Energy Outlook (STEO). The report, which is released monthly, is closely watched by analysts and traders in their quest to evaluate the supply and demand factors at play.
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November’s STEO is particularly of importance as releasing oil from the US Strategic Petroleum Reserve (SPR) appears to be a viable option for Biden’s administration. As such, EIA’s adjustments on October’s report will likely influence the government’s decision.
Notably, the probable release of crude oil from its SPR is a ‘second thought’ after calls for OPEC to increase production were rejected. Despite pressure from the US and other consumers, the alliance of oil-producing nations maintained its output cuts. It intends to continue with its modest increase of 400,000 bpd in December. With the ongoing rise in demand, decision by the US to release oil from its SPR may not be suffice to curb the soaring prices.
WTI price forecast
Crude oil price has remained buoyed above the crucial support zone of 80 as has been the case for a month now. Granted, the past week’s movements dented the commodity’s uptrend. WTI futures dropped to a one-month low of 78.24 before bouncing back above 80.
Even with the observed volatility, crude oil price is about 121.23% higher than it was at a similar period in 2020. Notably, it has surged by close to 75% since the beginning of 2021.
At the time of writing, WTI futures were up by 0.18% at 82.34. On a four-hour chart, it is trading above the 25 and 50-day exponential moving averages.
I expect it to trade within a tight range as investors await further cues from November’s STEO later in Tuesday’s session. The lower and upper borders of the aforementioned horizontal channel may be along the support zone at 80.85 and the resistance level at 83.53.
A bullish outlook by EIA will likely have crude oil price surge past the channel’s upper border to November’s high of 84.97. Past that level, the next target will be at 85.50. On the lower side, I expect the support zone at 80 to remain steady as the bull run continues.
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