Crude oil price pared some of its gains on the day, despite a drawdown in crude oil inventories. Data released today by the Energy Information Administration indicates that crude oil stocks fell by 4.7 million barrels for the week ended August 21, which was a more massive drop from the consensus number of -3.7million barrels. The previous week had seen a decline of 1.6 million barrels.
Today’s crude oil inventories report comes against the backdrop of the tropical storm (now Category 3 hurricane) that has formed in the Gulf Coast. Hurricane Laura has caused the evacuation of oil platforms on the Gulf Coast and shuttered production of 1.5 million barrels of crude oil per day.
Paradoxically, the crude oil price on the Brent benchmark is down 0.67% on the day following lack of follow-through action, even as hurricane Laura barrels down the Gulf Coast. It is expected to hit somewhere between Houston and New Orleans on Thursday as a Category 4 storm and threatens a large refining facility in Texas. The potential damage to the oil industry in the US may only be known once the storm has dissipated and assessments are done, with potential impact on crude oil price in the short term.
Technical Outlook for Crude Oil Price
Price is about to retest the previous ceiling of the rectangle pattern, located at the 45.39 price level. A bounce on this line sets Brent crude back on the path towards the 48.33 price level, although this is likely to be a slow march.
The 44.16 price level is the price to beat for sellers. A breakdown of this level takes Brent crude towards the 41.43 support, with 38.56 and 31.69 lining up as further support targets.
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Brent Crude Oil Price Chart (daily)
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