Crude Oil Price Update – OPEC+ Production Decision, EIA Inventories on Tap

U.S. West Texas Intermediate crude oil futures are trading sharply lower on Thursday as traders brace for the possibility that Saudi Arabia and other OPEC members may boost crude output to compensate for the loss in Russian production.

At 11:29 GMT, July WTI crude oil is trading $112.18, down $3.08 or -2.67%. On Wednesday, the United States Oil Fund ETF (USO) settled at $85.56, up $0.09 or +0.10%.

OPEC Meeting on Tap

OPEC and its allies including Russia, known as OPEC+, are scheduled to meet on Thursday, during which the group will decide on an oil production policy for July.

Two OPEC+ sources told Reuters on Thursday that Saudi Arabia and other OPEC members could boost oil output to offset a drop in Russian production. The Wall Street Journal first broke the story on Tuesday.

EIA Set to Release Weekly Inventories Data after API Reports Bigger than Expected Draw

Traders expect today’s Energy Information Administration (EIA) weekly inventories report, due to be released at 15:00 GMT, to show U.S. crude oil inventories fell by 3.0 million barrels, while gasoline and distillate stockpiles were forecast to have increased.

Late Wednesday, the American Petroleum Institute (API) reported a draw the week-ending May 27 for crude oil of 1.181 million barrels. Analysts had predicted a draw of 67,000 barrels.

The API also reported a draw in gasoline inventories of 256,000 barrels for the week-ending May 27. Distillate stocks saw a rise in inventory of 858,000 barrels for the week.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending lower. A trade through $119.98 will signal a resumption of the uptrend. Taking out $103.24 will change the main trend to down.

The minor trend is up. A trade through $108.61 will change the minor trend to down. This will confirm the shift in momentum.

The minor range is $108.61 to $119.98. The market is trading on the weak side of its pivot at $113.79, making it potential resistance.

The second minor range is $103.24 to $109.98. Its pivot at $111.11 is the next target.

The short-term range is $88.53 to $119.98. If the minor trend changes to down then look for the selling to possibly extend into its retracement zone at $104.26 to $100.54.

Daily Swing Chart Technical Forecast

Trader reaction to $113.79 and $111.11 is likely to determine the direction of the July WTI crude oil market on Thursday.

Bullish Scenario

A sustained move over $113.79 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into a minor pivot at $115.59, followed by the main tops at $119.98 and $121.17.

Bearish Scenario

A sustained move under $111.11 will signal the presence of sellers. This could trigger a break into the minor bottom at $108.61. Taking out this level could fuel an acceleration to the downside with the next target zone $104.26 to $100.54.