Oil News: Crude Oil Slips Below 50-Day MA Ahead of EIA Inventory Release

Light crude edges lower ahead of U.S. stockpile report

Light crude futures slipped slightly on Wednesday, retracing some of Tuesday’s gains as traders took a cautious stance ahead of the U.S. government’s weekly inventory report. The market is trading just under the 50-day moving average of $64.21, with prices last seen near $64.12. Although buyers briefly pierced a key pivot at $64.56 on Tuesday, the rally lost steam at $64.76, capping further upside for now.

Despite the mild pullback, prices remain supported above the 200-day moving average at $63.33, which continues to serve as a critical technical floor. A decisive move back above $64.76 could trigger renewed buying interest, potentially driving prices toward the next resistance zone between $65.41 and $66.18, with the September 2 high at $66.03 sitting inside that band.

At 09:45 GMT, Light Crude Oil Futures are trading $64.12, down $0.40 or -0.62%.

Ongoing Ukraine-Russia tensions help limit downside

While price action has cooled, geopolitical tensions continue to underpin the market. Recent Ukrainian drone strikes on Russian energy infrastructure have raised concerns about potential supply disruptions. Russia’s Transneft reportedly warned producers that output cuts may be required if export facilities remain compromised.

Analysts suggest that if the drone-related damage proves temporary, oil may return to a $5-per-barrel trading range. However, for now, the risk of further disruptions has introduced a bullish risk premium, helping limit downside pressure on prices.

Traders eye Federal Reserve policy for demand signals

The crude market is also closely watching the Federal Reserve’s policy decision expected later today. Markets are pricing in a 25-basis-point rate cut, which could lower borrowing costs and potentially boost fuel demand in the coming months.

Phillip Nova analyst Priyanka Sachdeva highlighted that the rate cut, along with geopolitical risk and tight distillate inventories, has supported recent price strength. However, she cautioned that OPEC+ output increases and persistent global supply concerns could keep a lid on sustained rallies.

API data shows mixed stockpile picture; EIA data next

On the supply side, preliminary American Petroleum Institute (API) data showed a decline in U.S. crude and gasoline inventories, but a rise in distillate stocks. The official Energy Information Administration (EIA) data due later today will offer clearer insight. According to a Reuters poll, analysts expect a crude draw alongside builds in gasoline and distillate supplies. However, a consensus of analysts polled by Dow Jones predict a 1.4 million barrel build.

Market Forecast: Cautiously Bullish

Light crude remains technically supported above the 200-day moving average, while geopolitical risk and expectations for a Fed rate cut offer fundamental backing. However, failure to reclaim $64.76 and pressure from rising OPEC+ output tempers bullish conviction. Unless EIA data shows a surprise build, the outlook leans cautiously bullish in the near term.

More Information in our Economic Calendar.