Crude Oil Price Update – Unexpected EIA Drawdown Sends Prices Sharply Higher

U.S. West Texas Intermediate crude oil futures are trading slightly higher shortly before the release of the U.S. Energy Information Administration (EIA) weekly inventories report. The price action suggests short-covering is taking place following yesterday’s bearish American Petroleum Institute (API weekly report that drove prices sharply lower earlier in the session.

Today’s report is forecast to show a 2.5 million barrel build. The API reported late Tuesday an estimated crude oil inventory build of 4.45 million barrels for the week-ending October 17. Analysts were looking for a 2.232-million-barrel build.

At 14:21 GMT, December WTI crude oil is trading $54.56, up $0.08 or +0.15%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher despite recent concerns over global demand. The market is being primarily supported by the hope of additional output cuts by OPEC and its allies.

The main trend will change to up on a trade through $54.99. A move through $52.46 will signal a resumption of the downtrend.

The minor trend is up. A trade through $52.85 changes the trend to down. This will also shift momentum to the downside.

The minor range is $50.89 to $54.99. Its 50% level or pivot at $52.94 is support.

The short-term range is $59.11 to $50.89. Its retracement zone at $55.00 to $55.97 is the next upside target zone and potential resistance.

Daily Forecast

Based on the early price action and the current price at $54.56, the direction of the December WTI crude oil market the rest of the session on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at $54.39.

Bullish Scenario

A sustained move over $54.39 will indicate the presence of buyers. This could trigger a surge into the main top at $54.99 and the 50% level at $55.00.

Overtaking $55.00 will indicate the buying is getting stronger. This could trigger an acceleration into the resistance cluster at $55.97 to $55.99.

Bearish Scenario

A sustained move under $54.39 will signal the presence of sellers. This could trigger an acceleration to the downside with $52.94 the next target.