Crude Oil Price Update – Lower Ahead of EIA Inventories Data after API Reports Surprise Build

U.S. West Texas intermediate crude oil futures are inching higher on Thursday after breaking longer-term Fibonacci support earlier in the session, as buyers and sellers continue to evaluate whether worries over tightening supply, or concerns about a global recession leading to lower demand will dictate the direction of the next major move.

At 09:04 GMT, October WTI crude oil futures are trading $81.95, up $0.01 or -0.01%. On Wednesday, the United States Oil Fund ETF (USO) settled at $67.61, down $3.81 or -5.33%.

API Reports Unexpected Storage Build

On the supply side, the American Petroleum Institute (API) reported a build this week for crude oil of 3.645 million barrels, while analysts predicted a draw of 733,000 barrels.

The build comes as the Department of Energy released 7.5 million barrels from the Strategic Petroleum Reserves in the week ending September 2, leaving the SPR with just 442.5 million barrels.

The API also reported a draw in gasoline inventories the same week of 836,000 barrels. Distillate stocks saw a build of 1.833 million barrels for the week.

Looking Ahead …

Today’s U.S. Energy Information Administration (EIA) weekly inventories report, due to be released at 15:00 GMT, is expected to show a draw of about 2.0 million barrels of crude oil.

There is breaking news ahead of the NYMEX opening. According to reports, Russian President Vladimir Putin has threatened to retaliate against any move by the European Union to cap the price of Russian gas by halting flows completely and suggesting a deal allowing Ukrainian grain to be exported to world markets could be disrupted.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at $81.23 will signal a resumption of the downtrend. A move through $90.39 will change the main trend to up.

The market is currently trading on the weak side of a long-term retracement zone at $81.85 to $88.26, making it resistance.

Daily Swing Chart Technical Forecast

Trader reaction to $81.85 is likely to determine the direction of the October WTI crude oil market on Thursday.

Bearish Scenario

A sustained move under $81.85 will indicate the presence of sellers. If this creates enough downside momentum then look for a possible break into a series of main bottoms at $79.83, $78.54 and $76.47 over the near-term.

Bullish Scenario

A sustained move over $81.85 will signal the presence of buyers. If this generates enough upside momentum then look for a near-term surge into $85.80, followed by $88.26.