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The Upside Prevails As Crude Oil Market Ignores Stockpile Rise

Global crude oil prices returned to the climbing lane on Thursday as the buying appetite resumed on supply-side concerns. Oil prices took a hit on Wednesday after US crude inventories data showed a rise in the stockpiles. However, concerns over Russia’s production cuts have seen traders vote in favour of price hikes. Brent crude oil traded at $85.14 per barrel, having risen by 50 cents or 0.58% at press time. Similarly, WTI rose by 1.03% or 84 cents to trade at 82.19.

On Wednesday, the EIA reported a stockpile buildup of 3.167 million barrels for the week ending March 20th, far above the forecast decline of 0.7 million. Despite facing Western sanctions, Russian oil still plays a major role in determining oil prices. Russia is the world’s third-largest crude oil producer and has been supplying India, China, Turkey and countries in Africa.  Notably, China and India are the top two leading crude oil importers in the world.

Russia ordered oil-producing companies on Monday to cut production as part of its target of reducing exports by 471,000 barrels per day to meet its OPEC+ commitments by June. This is expected to reflect in the price of oil in the near term.  Besides the production cuts, the Russia-Ukraine war has also impacted prices in the last 10 days, as Ukraine focused its attacks on Russian oil infrastructure. Forecasts have placed the resulting production disruption between 600,000-900,000 barrels per day. The Russia-fueled market disturbance has seen JP Morgan strategists forecast that Brent crude could hit $95 per barrel by May in their latest assessment.

Technical analysis

WTI crude price will maintain the uptrend if action remains above the 81.35 pivot. The buyers will encounter resistance at 82.25, but a move past that mark could build momentum to test 82.65. Conversely, a move below 81.35 will favour control by the sellers, with support at 80.90. A move below the support will likely propel further downside to target  80.55.