Oil bounces back sharply
Crude oil fell sharply yesterday afternoon, and the sell-off continued this morning. The move brought an end to a nine-day rally which saw front-month WTI gain just under 10%. Crude had brushed aside Tuesday’s disappointing inventory data from the American Petroleum Institute along with the jump in CPI. But it was unable to ignore yesterday’s inventory update from the Energy Information Administration. Numbers showed a build in US crude inventories of 12 million barrels, which was way above the 2.6 million expected. News of larger-than-expected drawdowns in gasoline and distillate stocks were shrugged off, unlike Tuesday’s API numbers which showed a similar pattern.
The sell-off in WTI and Brent came as both contracts approached their prior highs from the end of January. So while yesterday’s inventory build was the catalyst, it feels as if traders were already looking for an excuse to push prices lower.
But it wasn’t to last. Oil prices reversed sharply today, making back much of yesterday’s losses. It could be that the pull-back was all that was needed to reset prices for another attempt at the January high. As you can see in the four-hourly chart above, the area around $79.50 has acted as resistance a few times since mid-November. It seems possible that there will be fresh attempts to take it out.
The sell-off in WTI and Brent came as both contracts approached their prior highs from the end of January. So while yesterday’s inventory build was the catalyst, it feels as if traders were already looking for an excuse to push prices lower.
But it wasn’t to last. Oil prices reversed sharply today, making back much of yesterday’s losses. It could be that the pull-back was all that was needed to reset prices for another attempt at the January high. As you can see in the four-hourly chart above, the area around $79.50 has acted as resistance a few times since mid-November. It seems possible that there will be fresh attempts to take it out.
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