Crude oil price is trading steadily above the crucial level of $80. However, it has eased on its rallying after the unexpected rise in US oil inventories.
Crude oil supply
Late on Tuesday, the American Petroleum Institute (API) indicated that the amount of crude oil in storage had increased by 951,000 barrels for the week ending on 1st October. The figure is lower than the previous week’s build of 4.127 million barrels. However, it missed the analysts’ estimated draw of 300,000.
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The data comes a day before EIA’s inventory figures. In the previous release, the weekly stockpiles have risen by 4.578 million barrels. Analysts expect a reading of -0.418 million in Wednesday’s release.
Despite the unexpected rise in US oil inventories, the market appears to be keen on the positive demand outlook in the upcoming winter season. According to JTD Energy Services’ John Driscoll, the market may experience a “wild ride” in the coming months. During an interview with CNBC, Driscoll stated that the situation is “a bit scary as we contemplate what the prospects are for the winter ahead.”
The analyst points at the ongoing energy crisis in Europe and China’s power outages as issues that are bound to boost demand in the year’s final quarter. Earlier in the week, OPEC+ indicated that it will maintain its plan to hike output gradually by 400,000 bpd. This is despite the US government’s request to increase production.
Crude oil price technical outlook
Earlier on Tuesday, oil price rose further to hit its highest level since mid-October 2018. Brent futures, the benchmark for global oil, surged to 83.08 before pulling back.
Since the beginning of the month, the commodity has risen by about 64.02%. In the current month, its price is up by 5.51%. At the time of writing, Brent futures were up by 1.77% at 82.74.
On a three-hour chart, crude oil price is trading above the 25 and 50-day exponential moving averages. In the short term, I expect it to hover around 82.50 as it finds resistance at Tuesday’s high of 83.08. however, higher-than-expected stockpile numbers from EIA may push it to 85 before pulling back to around 82.50. A further pullback will likely place the support level along the 25-day EMA at 80.67.
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