WTI Crude Oil futures (NYMEX: CL) suffered losses following a robust inventory build last week, according to the Energy Information Administration (EIA). Since mid-December 2022, oil inventories have increased weekly, fuelling fears of declining demand.  

The American Petroleum Institute (API) forecasted inventories change of 1.2 million barrels which is in sharp contrast to the 9.9 million barrels realised this week. The EIA will today release their inventory count. If the EIA’s count supports the API’s trend, demand is likely waning despite China’s claim to fame for escalating crude oil demand following its reopening. Further downside pressure is expected as demand eases to create headwinds for WTI Crude Oil futures. 

Technical 

WTI Crude Oil Futures are firmly in a downtrend following price action’s move below the 50-Day moving average. Support and resistance were established at the $72.70 and $77.54 per barrel (BLL) levels, respectively. Presently, price is consolidating in a narrow range on low volumes between the $74.40 and $73.84 BLL levels.  

With bears currently dominating market sentiment, a breakout below the $73.84 BLL level on high volumes could validate a further leg down. The $72.70 BLL level is probable and more aligned with waning demand in a bear case. 

If bulls find support at current levels, price will likely breakout above the $74.40 BLL level and if accompanied by high volumes, price could head upward towards the $74.95 BLL level.  

Summary 

The key driver for WTI Crude oil Futures will be the EIA’s inventory count and high-priority U.S. economic data directly affecting inflation, such as the labour market report. If EIA’s inventory count is higher than expected, the $73.84 BLL level will be pivotal, as a breakout below it on high volumes could reassert bearishness.  

Sources: American Petroleum Institute (API), Reuters, TradingView