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Crude Oil on Edge: Anticipation Builds for Unexpected Rise in EIA Stockpile Numbers

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  • WTI Oil drops back below $74, under important support.
  • API overnight print was double the previous build. 
  • The DXY US Dollar Index sells off further and snaps below 101.

Oil prices are dropping near 1% during European trading hours on Thursday. The slide comes on the back of another build in US Stockpile numbers published overnight from the American Petroleum Institute (API). With a build of 1.837 million barrels against 0.939 million last week, the US seems to be plumbing Black Gold at an elevated pace. 

The US Dollar (USD) gapped lower this Thursday at the start of the Asian session and is still sliding lower. With that move, the US Dollar Index (DXY) snaps below 101 and is on its way to 100. As long as US yields do not stop falling, the Greenback looks to be hanging in the ropes – normally a positive for Oil but not today. 

Crude Oil (WTI) trades at $73.42 per barrel, and Brent Oil trades at $78.65 per barrel at the time of writing. 

Oil News and Market Movers: Traders brace for EIA numbers

  • Overnight Crude Stockpile publication from the American Petroleum Institute (API) was a surprise build of 1.837 million barrels against 0.939 million last week.
  • This evening near 15:30 GMT the Energy Information Administration (EIA) will release its number of barrels. Previous was a build of 2.909 million, with a drawdown of 2.704 million expected. 
  • QatarEnergy has signed a supply agreement with Shell International in Singapore to supply 18 million barrels per year of Qatari Crude as of 2024.
  • Refiners in India are triggering a boost in supplies from the Middle East and other nearby countries. Recent attacks on ships in the Red Sea raises the risk of longer shipping time and higher costs, which puts margins of Indian refiners under pressure.
  • Options are starting to flatten in WTI Crude and are pointing to a less bearish outlook for the oil market in the coming months, away from its most bearish outlook mid-November. 

Oil Technical Analysis: Range trade found

Oil prices are erasing gains from Wednesday and slipping below $74. The recent API numbers are showing that the US is trying to counterbalance any sudden blip in demand by relentlessly pumping Oil and dumping it on the market, in order to keep Oil prices muted. Outstanding question at the moment is of course how long this tug-of-war between the US and OPEC+ can continue. 

On the upside, $74 is still holding some importance, although the level has become very chopped up. Once back above there, $80 comes into the picture. Although still far off, $84 is next on the topside once Oil sees a few daily closes above the $80 level. 

Below $74, the $67 level could still come into play as the next support level to trade at as it aligns with a triple bottom from June. Should that triple bottom break, a new low for 2023 could be close at $64.35 – the low of May and March – as the last line of defence. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices fall sharply. 

US WTI Crude Oil: Daily Chart

WTI Oil FAQs

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

Crude Oil Facing Uncertainty: What to Expect from Upcoming EIA Stockpile Numbers

Crude Oil has been a topic of concern for many months now. With the global pandemic and subsequent lockdowns leading to a significant decline in demand for oil, the market has been struggling to stay afloat. However, the past few weeks have seen a glimmer of hope with countries reopening and a gradual return to normalcy. This has resulted in a rise in demand for oil, with prices starting to slowly rebound. But with anticipation building for the upcoming release of the Energy Information Administration’s (EIA) stockpile numbers, the question on everyone’s mind is: how will the market react? In this article, we will explore the current state of crude oil, the factors influencing the EIA stockpile numbers, and what we can expect from the future of the market.

Understanding the Current State of Crude Oil

The global oil market has been in a state of turmoil since the pandemic began, resulting in record-low oil prices and an oversupply of crude oil. The demand for oil has been heavily impacted by travel restrictions, reduced economic activities, and the shift towards renewable energy sources. This has forced major oil-producing countries like Saudi Arabia and Russia to cut production to stabilize prices.

However, things are starting to look up for the oil market. With economies gradually reopening, there has been a rise in demand for gasoline and other petroleum products. This has led to an increase in oil prices, which have almost doubled since their historic low in April. As a result, many investors are cautiously optimistic about the future of crude oil.

Factors Influencing the Upcoming EIA Stockpile Numbers

The EIA stockpile numbers play a crucial role in the oil market as they indicate the current level of supply and demand for oil. These numbers are released every week and are used by traders, analysts, and investors to make informed decisions. The anticipation for the upcoming numbers is at an all-time high due to the uncertainty surrounding the oil market.

Several factors can influence the EIA stockpile numbers, including production cuts, demand, and geopolitical events. The recent agreement between OPEC and its allies to extend production cuts until the end of July has helped stabilize prices and is expected to reflect in the upcoming numbers. Additionally, the increase in demand for oil in the US, China, and other major economies will also play a role in the stockpile numbers. Any unexpected rise or decline in demand can greatly impact the market and the stockpile numbers.

What to Expect from the Future of the Market

The future of the oil market remains uncertain, with many factors at play. The gradual opening up of economies and the rise in demand for oil is a positive sign, but it’s essential to keep in mind that we are still in the midst of a global pandemic. Any unexpected resurgence of cases or re-imposition of lockdown measures could heavily impact the market. Additionally, the success of ongoing talks between OPEC and its allies to extend production cuts will also be a major influence on the market.

Some experts predict that the oil market is in for a slow recovery, with prices gradually increasing over the next few years. However, there are still concerns about oversupply and the potential for a second wave of the virus, which could delay the recovery even further.

Practical Tips for Investors

With the market on edge and uncertainty still looming, investors need to tread carefully. Here are some key tips to keep in mind when navigating the oil market:

1. Keep a close eye on the EIA stockpile numbers and the factors that can influence them.

2. Stay updated on global economic and political events that can impact the market.

3. Diversify your portfolio to minimize risks.

4. Be prepared for potential volatility and have a risk management plan in place.

5. Consider consulting with a financial advisor for expert guidance.

In Summary

The anticipation for the upcoming EIA stockpile numbers is at an all-time high, as the oil market continues to recover from the effects of the pandemic. With the current state of the market still uncertain, it’s essential to stay informed and cautious when making investment decisions. The upcoming numbers, along with ongoing global events and production cuts, will heavily influence the future of the market. As always, it’s crucial to stay vigilant and informed to make the best financial decisions.

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