Crude oil prices on the Brent and WTI benchmarks are on the retreat this Thursday as the markets take a break from yesterday’s surge that followed the winter storm in the US state of Texas.
Panic buying had driven crude oil price on the Brent above $65 as the cold snap caused freezing of crucial pipelines, disrupting supplies of natural gas and crude oil, leaving residents of major towns like Houston without power or running water.
However, concerns of an elongated period of supply disruption have cooled, allowing for a retreat in crude oil prices. The decline has however been limited by the surprise drawdown in crude oil inventories, as reported by the Energy Information Administration. The EIA is saying that inventories of crude oil fell by 7.3 million barrels in the week ended February 12, 2021. This far exceeds the drop of 2.1 million barrels that was forecast by the markets, and also exceeds the drawdown of 6.6 million barrels that was seen in the previous week.
The EIA report has forced crude oil price on the Brent benchmark off intraday lows. However, prices are still down 0.74% as of the time of writing.
Technical Levels to Watch
The daily candle is challenging the 64.26 support, with the bounce allowing this price level to stay intact. However, it continues to remain at risk as crude oil prices are now getting overextended (RSI deeply overbought).
A bounce on this support allows for a renewed push towards 65.95, with the 20 December 2019 high at 66.81 lining up as an additional layer of resistance above current prices.
On the flip side, a breakdown of 64.26 brings 62.21 into the picture as a new downside target. 60.07 and 57.47 could become relevant as extra support targets, if the decline continues.
Brent Crude; Daily Chart