|

WTI rebounds as geopolitical risks offset bearish US inventory buildup

  • The barrel rebounds to around $60.80 on Wednesday, up 1.0% for the day.
  • The largest inventory build in over three months weighs on sentiment, but traders await official data.
  • Geopolitical tensions in the Middle East and the Black Sea support the risk premium on energy.

West Texas Intermediate (WTI) US Oil trades around $60.80 on Wednesday at the time of writing, gaining 1.0% on the day after dipping to the $60.00 region earlier. The market attempts a rebound despite bearish supply signals, as traders await the official Energy Information Administration (EIA) inventory report later in the day.

The American Petroleum Institute (API) reported on Tuesday that US Crude Oil stocks rose by 6.5 million barrels for the week ending October 31, following a 4.0 million-barrel draw in the previous week. According to Oilprice’s calculations based on API data, US inventories have posted a net gain of about 3.6 million barrels so far this year. Analysts at ING noted that these figures are “bearish for crude,” although the sharp declines in gasoline and distillate inventories support refined product cracks, helping offset some of the pressure on the overall Oil complex.

On the geopolitical front, the risk of escalation remains a key source of support. Ukraine has intensified its strikes on Russian energy infrastructure, claiming an attack on Lukoil’s Norsi refinery in Nizhny Novgorod (which processes about 340,000 barrels per day), as well as targeting the Tuapse and Saratov facilities. Any escalation in the Middle East or the Black Sea could reignite supply concerns and sustain the WTI price.

In the short term, confirmation by the EIA of another significant build in US crude inventories could cap WTI’s recovery. However, ongoing geopolitical tensions and resilience in refined product demand provide offsetting factors that may stabilize the market in the near term.

WTI Technical Analysis: Crude Oil extends range-bound consolidation

WTI price chart
WTI 4-hour chart. Source: FXStreet.

WTI US Oil finds support around $59.90 on Wednesday, starting a rebound to retest the resistance area near $61.00. The intraday price action reflects a continuation of the horizontal consolidation phase that has been in place since October 28, with prices oscillating within a tight range between $59.50 and $61.30.

A breakout above the upper bound of the range could open the door for a test of the next resistance area around $62.50, followed by a potential rally toward the September high near $66.00.

On the downside, the lower limit of the range is reinforced by the 100-period Simple Moving Average (SMA) on the 4-hour chart, currently at $59.46. A decisive break below this level would likely revive selling pressure and expose the October 20 low near $56.00.

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

More from Ghiles Guezout
Share:

Editor's Picks

AUD/USD sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold extends losing spree as US bond yields hold ground

Gold extends its losing streak for the fourth trading day on Wednesday, trading 0.2% lower to near $4,115 in the Asian session. The precious metal is under pressure as United States Treasury Yields on the back of significant gains in oil prices in past few weeks.

Zcash's bullish reversal eyes $1,698 peak on NU7 upgrade
Zcash (ZEC) shows signs of bullish recovery above $1,200 on Wednesday, following a 9% rebound the previous day linked to the upcoming NU7 upgrade. Blockworks released a Zcash holders report on Tuesday, highlighting steady network growth. The technical outlook for ZEC is bullish, with bulls eyeing an extended rally toward $1,698.
US – Midterm update: Pre-election tail risk scenarios
With two weeks until the US midterm elections on 3 November, early voting has already opened in more than 40 states. Prediction markets are broadly unchanged since we published our Midterm update, 13 October. The prediction market Polymarket continues to see Democrats winning both chambers as the most likely outcome, with a 62.5% probability.
The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.