Crude Price Forecast: Inventory Surges and Geopolitical Tensions Jostle Crude Prices

Despite facing multiple headwinds, USOIL has rebounded from its overnight losses, finding new support around the $76.50 level. Initially, prices dipped following a report from the American Petroleum Institute (API) which showed a significant surge in weekly crude oil stocks by 8.52 million barrels—a development that typically signals a rise in inventory levels, thereby exerting downward pressure on prices.

Additionally, crude oil prices faced headwinds as reports surfaced that some OPEC countries have not adhered to their promised production cuts, raising concerns over an oversupply in the market. Furthermore, the impact of recently released upbeat US inflation data also played a role in pressuring crude oil prices downwards.

On the flip side, the market has seen some positive momentum due to escalating fears of supply disruptions in the Middle East. Recent developments, including Israel’s military actions in Gaza, which have resulted in significant casualties and injuries, alongside ongoing truce negotiations hampered by demands for the release of Palestinian prisoners, heighten geopolitical tensions.

Such events typically contribute to concerns over potential supply disruptions, thus providing upward support to crude oil prices.

The fall in crude oil prices can be attributed to several factors, including concerns over OPEC’s adherence to agreed production levels. Some members have reportedly not fully complied with the cuts, according to ANZ analysts.

Additionally, the API’s report of an unexpected 8.52 million barrel rise in US crude inventories further adds to the pressures, suggesting an abundance of supply.

The impact of US inflation data on oil prices cannot be understated. The recent rise in the US Consumer Price Index (CPI) to 3.1%, although slightly below the previous 3.4%, suggests a continued period of high interest rates, potentially dampening demand for oil.

Moreover, the Core CPI remained steady at 3.9%, defying expectations for a drop. With Core Inflation climbing by 0.4%, exceeding forecasts, these indicators collectively suggest a bearish outlook for oil demand, reflecting broader economic concerns.

On today’s chart, WTI Crude Oil presents a technical battleground as it hovers near the pivot point of $76.50, with current trading at the $76.50 level. Above this, resistance is layered at $78.00, $80.00, and the more formidable $82.00, each level marking potential ceilings for bullish advances. Conversely, support levels form a safety net at $75.00, $72.00, and a stronger foothold at $70.00.

The Relative Strength Index (RSI) reads at 55.56, indicating a neutral market momentum without immediate overbought or oversold conditions. The 50 EMA (50-Day Exponential Moving Average) lies at $75.04, just below current pricing, suggesting a tentative support for the commodity.

A double-top pattern appears to be establishing resistance near the $78.85 level, indicating a possible reversal zone if approached. This chart formation, coupled with the pivot structure, suggests that selling pressure could intensify below $78.55, painting a cautiously bearish picture for WTI Crude Oil in the immediate term.