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Oil to Snap 3-day Losing Streak on Declining US Stockpiles

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  • Oil prices are rising due to a significant decrease in US oil inventories, exceeding expectations.
  • The CCP’s third plenum could impact oil prices depending on its policy decisions. 
  • Support and resistance levels are identified.

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Oil prices are on the offensive this afternoon following US inventories data. In its weekly survey released on Tuesday, the American Petroleum Institute reported that U.S. oil inventories declined by 4.4 million barrels last week. This marks the third consecutive weekly decrease and significantly exceeds the consensus estimate of a 33000-barrel drop, as per a Reuters poll.

The Energy and Information Administration (EIA) released its data a short while ago and the story was pretty similar. EIA data had inventories falling by 4.9 million barrels as opposed to the API number and even more staggering compared to estimates of a 33000 barrel drop.

US EIA Weekly Crude Inventories

Source: Refinitiv (click to enlarge)

This is a welcome sign for oil traders following the concerning data out of China earlier in the week. Comments today around tighter trade restriction by the US also threatens to affect global trade and could by extension affect oil sales as well. 

The CCP, China’s ruling party is staging its third plenum, where key policy decisions are being discussed. Market participants will no doubt be hoping for a concrete plan on boosting growth and addressing concerns of market participants around the globe. 

Technical Analysis

Oil prices are on course to snap a 3-day losing streak while price remains trapped between the 100 and 200-day MAs. Inventories data proving to be the catalyst today, now whether that is able to keep oil prices at these levels remains to be seen. 

A break above the 100-day MA brings resistance at 86.200 into focus with the next resistance resting at 87.900. There is a very good chance that oil prices could remain trapped between the 100 and 200-day MAs.

Support

  • 83.50 (200-day MA)
  • 83.00
  • 81.58

Resistance

  • 85.30
  • 86.21
  • 87.90

Brent Crude Oil Daily Chart, July 17, 2024

Source: TradingView.com (click to enlarge)

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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Zain Vawda

Zain Vawda

Market Analyst at OANDA
Zain is an experienced financial markets analyst and educator with a rich tapestry of experience in the world of retail forex, economics, and market analysis. Initially starting out in a sales and business development role, his passion for economics and technical analysis propelled him towards a career as an analyst.

He has spent the last 3 years in an analyst role honing his skills across various financial domains, including technical analysis, economic data interpretation, price action strategies, and analyzing the geopolitical impacts on global markets. Currently, Zain is advancing in obtaining his Capital Markets & Security Analyst (CMSA) designation through the Corporate Finance Institute (CFI), where he has completed modules in fixed income fundamentals, portfolio management fundamentals, equity market fundamentals, introduction to capital markets, and derivative fundamentals.

He is also a regular guest on radio and television programs in South Africa, providing insight into global markets and the economy. Additionally, he has contributed to the development of a financial markets course approved by BankSeta (Banking Sector Education and Training Authority) at NQF level 6 in South Africa.
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