Crude Oil Prices Fall as API Inventories Rise Unexpectedly, EIA Data, Fed Meeting Loom

Key Takeaways

U.S. West Texas Intermediate Crude Oil futures are edging lower after two days of gains, following an American Petroleum Institute (API) report showing an unexpected rise in U.S. crude inventories last week, indicating weakening fuel demand.

Traders and analysts are now awaiting data from the U.S. Energy Information Administration (EIA) to see whether it confirms signs of weaker crude demand.

Additionally, the Federal Reserve’s interest rate and policy decisions, due to be released later in the day, are being closely monitored.

The June WTI Crude Oil is trading at $69.33, down $0.44 or -0.63%, at 07:16 GMT, while the United States Oil Fund ETF (USO) settled at $61.24, up $1.45 or +2.42% on Tuesday.

API Reports US Crude Oil Inventories Surge, Defying Expectations and Raising Global Supply Concerns

According to the latest API data, U.S. crude oil inventories rose unexpectedly by 3.3 million barrels for the week ending March 17, defying expectations for a drawdown of about 1.6 million barrels.

The data also showed increases in gasoline inventories by 2.73 million barrels and distillates by 1.53 million barrels.

Cushing, Oklahoma saw an increase in crude oil inventories by 2.72 million barrels on top of the 3.378-million barrel hike reported in the previous week.

Oil Prices Capped Amid Global Banking Crisis and Fed Rate Hike Concerns

Oil prices have been under pressure due to concerns over the global banking crisis. However, OPEC+ officials and analysts remain confident that increasing demand will drive prices higher in the coming months.

Additionally, some experts predict that the Fed could pause further rate hikes due to disruptions in the global banking sector, which could help boost fuel demand and economic activity.

There are also concerns that supply may get hit more than demand amid the banking crisis, and US shale output could be at risk from tighter credit conditions.

Daily June WTI Crude Oil Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $64.58 will signal a resumption of the downtrend. The main trend will change to up on a move through the last swing top at $80.97.

The minor trend is also down. A trade through $69.94 will change the minor trend to up. This will confirm the shift in momentum.

On the downside, the nearest support is a long-term 50% level at $68.76, followed by a minor pivot at $67.26. On the upside, the closest resistance is a 50% level at $71.08, followed by a long-term Fibonacci level at $73.05.

Daily June WTI Crude Oil Technical Forecast

Trader reaction to the long-term 50% level at $68.76 is likely to determine the direction of the June WTI crude oil market on Wednesday.

Bullish Scenario

A sustained move over $68.76 will indicate the presence of buyers. The first upside target is $71.08. Overcoming this level will indicate the buying is getting stronger. This could extend the rally into $73.05.

Bearish Scenario

A sustained move under $68.76 will signal the presence of sellers. The first downside target is $67.26. If this level fails as support then look for the selling to possibly extend into $64.58. If this level is taken out then look for the selling pressure to increase with $61.27 the next target.

Side Notes

Remember that $68.76 to $61.27 is a long-term value zone.