Crude Oil Price Update – Larger-than-Expected API Crude Build Weighs on Oil Prices

U.S. West Texas Intermediate crude oil futures are edging lower on Wednesday after a private industry report showed crude oil stockpiles rose more than expected. Meanwhile, fear of a rebound in COVID-19 cases in top importer China weighed on demand.

At 06:19 GMT, December WTI crude oil futures are trading $88.58, down $0.33 or -0.37%. On Tuesday, the United States Oil Fund ETF (USO) settled at $74.47, down $2.09 or -2.73%.

Traders Waiting for Election Results

It’s too early to tell, but so far, the price action suggests traders are paying little attention to the U.S. mid-term elections. Although traders could eventually respond once the official results are released.

American Petroleum Institute Reports Bigger-Than-Forecast Build

The American Petroleum Institute (API) reported a large build late Tuesday for crude oil of 5.618 million barrels for the week-ending November 4. Traders were anticipating a 1.4 million increase.

China Reports More COVID Cases

Last week, crude oil speculators bet heavily on the possibility China would begin relaxing its COVID restrictions, but they may have acted too soon since COVID cases in Guangzhou and other Chinese cities have surged.

Short-Term Outlook

WTI crude oil is under pressure because of the increase in supply and a possible drop in demand. Both events are short-term factors, however. Longer-term, the market is expected to be supported by the current OPEC+ production cuts and the European Union’s plan to block the sale of Russian oil on the open market.

So while prices could fall over the short-term, buyers would likely step in once the market reaches an attractive value area.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the confirmation of the November 7 closing price reversal top.

The minor trend is also up. A trade through $87.60 will change the minor trend to down. This will confirm the shift in momentum.

A trade through $93.74 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $85.30 will change the main trend to down.

The minor range is $85.30 to $93.74. The market is currently trading on the weak side of its pivot at $89.52, making it resistance.

On the upside, the major resistance is the long-term retracement zone at $93.24 to $97.38. This area stopped the rally at $93.74 on November 7.

On the downside, the nearest support is a pair of 50% levels at $85.49 and $84.72. This is followed by a pair of Fibonacci levels at $82.59 and $79.52.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at $89.52 is likely to determine the direction of the December WTI crude oil futures contract on Wednesday.

Bearish Scenario

A sustained move under $89.52 will indicate the presence of sellers. Taking out $87.60 will change the minor trend to down. This could trigger an acceleration into the support cluster at $85.49 to $84.72.

Since the main trend is up, buyers could come in on a pullback into this area.

Bullish Scenario

A sustained move over $89.52 will signal the presence of buyers. The first upside target will be a minor pivot at $91.00, followed by the resistance cluster at $93.24 to $93.74.