Crude Oil Price Outlook: Key Levels Ahead of EIA's Inventory Data

Summary:

Crude oil price is trading lower after OPEC left its estimates of global oil demand unchanged. US inventories data are a key factor in today's session.

Crude oil price is still within a horizontal channel as the coronavirus pandemic remains as the greatest hurdle in the recovery of global oil demand. In its monthly report, OPEC left its estimates on the growth of global oil demand unchanged at 5.95 million bpd. The probable economic contraction in India, which is the third largest crude oil consumer, is one of the key underlying reasons.

At the same time, crude oil price is finding support from the better-than-expected inventories data from API. According to the institute, weekly stockpiles dropped by 2.533 million compared to the expected -2.250 million. However, the decline is less than the previous week’s -7.688 million barrels. Investors are now looking at whether today’s inventory data from EIA will confirm the trend.

WTI Price Technical Outlook

Crude oil price has cancelled some of its previous gains. At the time of writing, WTI futures were down by 0.53% at 65.12. On Tuesday, the benchmark for US oil had surged to 65.46 after rising from its one-week low of 63.67. It has been trading within a horizontal channel over the past week. The channel’s upper and lower limits are 65.73 and 63.87 respectively. On a 2-hour chart, it is slightly above the 25 and 50-day exponential moving averages.

With both EMAs at 65, WTI oil is likely to trade sideways along that support level ahead of the US inventory data. While better-than-expected oil stockpiles data may push the price to 66, it is likely to face some resistance at that level. Subsequently, the futures could remain within the horizontal channel in the short term. However, this thesis will be invalidated by a move below 63.50.