API Reports A Surprising Build in Inventories
WTI crude oil price traded higher for the most part of yesterday’s trading but quickly gave up its gains after a report from the American Petroleum Institute (API) showed a build in inventories. By the end of the New York session, WTI crude oil price CFDs settled at $49.89, down from its intraday highs at $50.63.
According to API, there was a build of 6 million barrels of oil in the week ending on February 7. This was much higher than anticipated at 2.987 million barrels. Consequently, the reading was bearish for crude oil price because it suggests that US demand for the commodity will be subdued given that there is a big inventory left.
WTI Crude Oil Price Outlook
Interestingly, WTI crude oil price CFDs still looks bullish despite the fall in yesterday’s New York session.
On the hourly time frame, we can see that the commodity made a higher low after a series of consecutive lower lows. This has allowed for an inverse head and shoulders chart pattern to form. In forex trading, this is considered as a bullish reversal signal. A close above today’s Asian session high at $50.73 would effectively break neckline resistance and could trigger a rally to the $52.00 handle.
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On the other hand, a drop below yesterday’s New York session low at $49.67 will invalidate the bullish chart pattern. It could mean that WTI crude oil price may still fall to last week’s lows at $49.27.
EIA Crude Oil Inventories Report Due Today
Today’s, crude oil inventories report from the Energy Information Administration (EIA) could dictate the price action of oil. Due at 3:30 pm GMT, the official government data is expected to show a 3.1 million barrel-surplus in inventories. A higher-than-expected figure could be bearish for oil while a lower-than-expected reading could be bullish for it.