WTI crude edges higher ahead of EIA report, but traders brace for possible test of $59.27–$58.49 support zone.
API data shows U.S. crude inventories fell by 4.02M barrels, offering near-term support to oil prices.
US-China summit could ease trade tensions and boost oil demand, but no breakthrough is guaranteed.
Oil Prices Steady as Market Awaits EIA Data and US-China Meeting
Light crude futures edged slightly higher in early Wednesday trade as market participants positioned ahead of the U.S. Energy Information Administration (EIA) weekly inventory report, expected to show a draw of 900,000 barrels. Broader sentiment remains cautious, with traders closely tracking geopolitical signals from a scheduled U.S.-China meeting and the upcoming OPEC+ policy decision.
API Reports Point to Larger-Than-Expected Inventory Draws
Sentiment received a modest lift after Tuesday’s American Petroleum Institute (API) report indicated sharper stock declines than anticipated. U.S. crude inventories reportedly fell by 4.02 million barrels last week, while gasoline and distillate stocks dropped by 6.35 million and 4.36 million barrels, respectively. Analysts highlighted that the data, if confirmed by the EIA, could offer near-term support to oil prices, particularly as product inventories tighten into year-end.
Geopolitical Focus Shifts to US-China Dialogue
Traders are also watching Thursday’s meeting between U.S. President Trump and Chinese President Xi Jinping in South Korea. Markets view the summit as a potential easing point in bilateral trade tensions, particularly after Trump signaled a willingness to reduce tariffs in exchange for cooperation on fentanyl regulation. China’s foreign ministry characterized the meeting as a chance to “inject new momentum” into relations. Any breakthroughs may support crude demand expectations in the world’s top two oil-consuming nations.
OPEC+ Output Increase Speculation Caps Gains
Oil’s upside remains limited, however, by renewed supply concerns. Sources close to OPEC+ talks indicated the group is leaning toward a modest production increase in December. Two sources specifically cited a potential boost of 137,000 barrels per day. The possibility of fresh supply arriving at a time of uncertain demand growth continues to weigh on market sentiment. Both Brent and WTI slid by over 1.9% in the previous session, erasing some of last week’s gains driven by U.S. sanctions on Russian oil majors Lukoil and Rosneft.
Outlook: Oil Prices Forecast Bearish as WTI Tests Key Technical Zone
Daily Light Crude Oil Futures
Despite fundamental support from inventory data and diplomatic developments, the technical setup remains fragile. WTI crude reversed higher at $59.70 earlier today, just above the 50%–61.8% Fibonacci retracement zone of the recent rally from $55.96 to $62.59, which lies between $59.27 and $58.49. This zone now acts as a key support base.
A sustained move below $59.27 would likely trigger further selling pressure, while upside is capped by the 50-day moving average at $61.52 and the 200-day moving average at $62.08. Without a decisive break above these resistance levels, technical bias remains negative. Short-term oil prices forecast is bearish, with near-term direction likely to be set by trader reaction within the $59.27–$58.49 retracement zone.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
