Crude oil experienced downward pressure at the open of the Sydney trading session as news of increasing oil inventories placed the commodity under pressure. Crude Oil Futures (May) fell from a newly formed high of 53.16 erasing Tuesday’s rallies on the back of the increasing inventory data which surprised the market.
The inventory data, which showed a net increase of 10.95 million barrels, represents the largest single inventory increase since 2006. This figure posed a surprise for markets as forecasts had placed the inventory figure in the range of 3.34 million barrels. Given that Saudi Arabia is continuing output at current levels it is likely that supply will continue to outstrip demand and place crude prices under further downward pressure.
Technical Analysis
Volatility during the morning trading session caused crude to push through the bullish trend line which was forming on the 4 hour chart as the selling pressure intensified. Major support for the commodity exists within the 47.70 range which is likely to be tested in the coming days as concerns regarding the ever increasing reserves at Cushing mount. On the upside, Crude Oil (May) faces minor resistance at the 55.71-55.01 level when the upside returns to play.
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