Crude Oil Price Under Pressure Amid a Commodity Sell-Off

Summary:

Crude oil price is trading lower amid a commodity sell-off. Investors are also digesting EIA's data on the rise in US oil inventories.

Crude oil price is trading lower amid the ongoing inflation fears. WTI futures are down by 0.78% at $62.85. At the same time, the benchmark for global oil dropped by 0.93% at $66.04. The decline comes from the broad sell-off in both the stock and commodities market. This is after the FOMC meeting minutes on Wednesday showed that the Federal Reserve may consider tapering its asset purchasing program in the upcoming meetings.

Crude oil price is also reacting to Wednesday’s data on US oil inventories. According to EIA, the stockpiles rose by 1.321 million barrels compared to the expected 1.623 million barrels. While the figure is better than expected, it still represented a significant build in inventories.

WTI Technical Outlook

Crude oil price is trading lower even as the bulls in the market attempt to recoup some of the previous losses. At the time of writing, WTI futures are down by 0.78% at 62.85 with an RSI of 33. On a four-hour chart, it is trading below the 25 and 50-day exponential moving averages.

Based on the ongoing optimism on the recovery of global oil demand, I expect WTI futures to continue finding support at 62. It is likely to rise to 64, where it will experience some resistance before moving higher to 67. In the near term, it may remain range-bound between 62 and 64. However, this thesis will be invalidated by a move below 62.