Crude Oil Price Hits $70 As U.S. Crude Oil Stocks Stage Surprise Drop

Summary:

Crude oil price on the Brent crude benchmark touches off the $70 mark as crude oil stocks in the US show a surprise slump.

The U.S. crude oil inventories report for the week ended 30 April showed a huge drop in stocks, according to the U.S. Energy Information Administration (EIA).

Inventories fell by 8 million barrels, which exceeded the expected drop of 1.9 million barrels. Crude oil stocks had added 100,000 barrels the previous week.

In explaining the huge drop, the EIA report cited a jump in crude oil utilization by U.S. refineries inputs by about 225,000 barrels per day more than the previous week’s average, taking refining volumes to 15.2 million barrels per day. Imports also fell by 1.2 million barrels per day from the last week.

Easing of restrictions in the U.K. and the U.S. has boosted demand hopes, which have mainly counteracted the expected bearish imprint of a loosening of production curbs by OPEC + anticipated jump in supply if Iran’s sanctions are lifted.

Crude oil price on the Brent crude benchmark is up 0.27% on the day.

Technical Levels to Watch

Brent crude has seen price inch close to the 70.00 psychological resistance due to today’s EIA report. This move also allows the price to test the upper border of the bearish flag’s consolidation area. If crude oil price can break above the 70.00 barrier, it invalidates the bearish flag and opens the door towards the 71.44 price level, thus matching 2021’s high.

On the other hand, rejection and pullback from this area maintain the trajectory expected for the bearish flag, with bears aiming to force a breakdown that targets the 57.47 price level as the price completion point of the pattern. This drop would have to take out support levels at 67.74, 66.81, 65.95, 64.26, and 62.21 in sequence for the measured move to be achieved.