Crude oil prices have defied strong US inflation data to rise, as the market seems to have found new fodder away from Federal Reserve interest rate cuts. Benchmark West Texas Intermediate (WTI) crude stood at $78.05 per barrel, up +0.23% at 11.00 am GMT. Similarly, Brent Crude was up +0.28%, to trade at 83.00. The commodity hit its highest price since January 30th on Tuesday and seems on track to continue the uptrend.
Oil prices could, however, come under renewed pressure from concerns regarding potential oversupply. Unofficial US inventory data from the American Petroleum Institute (API) shows that the US oil stockpile grew by 8.5 million barrels last week. Meanwhile, the market consensus forecast on the official Energy Information Administration (EIA) data expects the figure to come at 5.52 million barrels.
Nonetheless, there has been a notable trend of the actual figures overshooting the consensus estimates for the last two readings. A third such occurrence would almost certainly confirm that the market could be headed for a supply glut. Oil prices are already under pressure from reduced demand from an underperforming Chinese economy, and a glut would put further strain.
However, geopolitical activities in the Middle East could provide tailwinds for the world’s most traded commodity. Israel has slowed down its air raids on Gaza this week but is adamant that a ground offensive into the densely populated Rafah City remains on the cards. A spike in hostilities could bring greater instability in the oil-producing region and spur up oil prices.
Technical analysis
WTI crude oil price is currently on a neutral momentum, leaning towards the bullish side, as shown by the RSI indicator. This will establish a pivot at 77.10, with the upward momentum likely to meet the first resistance at 78.50. Further control by the bulls could see a breach of the first resistance, with the next target moving to 79.00. However, if the price moves under 77.10, it could signal bearishness, which will be confirmed if the price breaches the first support at 76.60. In addition, the support could go as low as 76.10 if the momentum slows down further.
WTI crude oil price on a 30-minute chart