Oil Declines on Expected U.S. Crude Accumulation

Oil prices fell further on Wednesday after the surprise decision by the U.S. government to release millions of additional barrels from its strategic petroleum reserve (SPR) and because of a possible accumulation of crude inventories in the United States.

On Monday, the U.S. government said it would put 26 million barrels of its strategic reserves on sale to comply with a law passed in Congress almost ten years ago. The U.S. administration was initially hesitant to do so, given that 180 million barrels had already been released from the SPR last year.

However, it was probably Russia’s announcement last week that it would cut oil production by half a million barrels per day in March that prompted the U.S. government to change its mind. If this decision could surprise the energy markets, it is above all because the United States had given itself earlier commitments to replenish its reserves.

So, all of this, combined with mounting supplies – as per the last American Petroleum Institute (API) report that came up yesterday – is pulling crude oil prices down. On Tuesday evening, API estimated that crude inventories increased by 10.51 million barrels last week, and gasoline inventories increased by 846,000.

On a macroeconomic level, the U.S. dollar index (DXY/USDX) has rebounded just above the $100 mark ($100.820, to be precise) to reach the upper band of its regression channel. The level to be monitored is 105.631 (its previous swing high), as a breakout above that could display stronger bullish enthusiasm.

The second scenario would be a return to the lower band of its regression channel, triggering some buying pressure around the quarterly pivot acting as a support (S1) and the strong $100 psychological mark.

On the stock market, equities were also closing lower yesterday following the U.S. yearly inflation figure that came out at 6.4% (versus the 6.2% expected) as investors were preparing for another tightening action on the Fed’s monetary policy.

On the West Texas Intermediate (WTI) crude oil March 2023 futures contract, the bears started taking over around the quarterly pivot (P) level.

So if we consider the long-term bearish trend characterized by the downtrend regression channel, we could expect a breakout of the short-term channel (the small one encompassed by the larger one) to the downside, probably going to explore the next quarterly support (S1) located around the $70-71 area.

This Post Has 17 Comments

  1. Edisonunumb

    viagra online spedizione gratuita: acquisto viagra – viagra acquisto in contrassegno in italia

  2. NormanVaf

    comprar viagra en espaГ±a envio urgente: viagra precio – comprar viagra en espaГ±a amazon

  3. NormanVaf

    sildenafilo cinfa 100 mg precio farmacia: viagra precio – comprar viagra sin gastos de envГ­o

  4. NormanVaf

    comprar viagra en espaГ±a: comprar viagra – sildenafilo 100mg precio farmacia

Leave a Reply

Contact Us

Disclaimer

Forex, Crypto, Options, and Binary Options have both large potential rewards and large potential risks. Therefore, before investing or trading any of the assets, ensure you are aware of and willing to accept the accompanying risks. Do not trade money you cannot afford to lose.

All Rights Reserved. None of the content of this website can be published elsewhere by any means without the prior consent of the owner(s). Please, check our terms & conditions and privacy policy before continuing to use this website.

This website and its owner(s) are not in any way liable for any incurred loss, whether caused by the information provided on this website or otherwise. The use of this website, including the content and information provided, is the user’s sole liability.