Will the Large Inventory Build Threaten Oil Futures?

The WTI Crude Oil Futures (NYMEX: CL) have faced a tumultuous week, witnessing a 2.67% decline amid Saudi Arabia’s price cuts for Arab Light crude, signalling potential demand weakness.  

Compounding this, the US Energy Information Administration reported an unexpected 1.338 million barrel inventory build against an expected drawdown, indicative of subdued demand. Wednesday’s session witnessed a 1.20% dip in WTI Crude Oil Futures, reflecting the market’s responsiveness to real-time factors.  

Amidst these downside pressures, geopolitical tensions in the Middle East have served as a counterforce, buoying the oil futures on supply concerns. Today’s focus turns to US inflation data, a key determinant for the outlook of monetary policy, potentially steering the trajectory of the oil futures in the short term. 


The WTI Crude Oil Futures’ trajectory has been a tale of fluctuating fortunes within a descending channel pattern, indicating a bearish stance.  

A crucial pivot at $67.71 per barrel, coupled with oversold RSI conditions, sparked a rebound towards the channel’s upper boundary, forming a support level. This led to the oil futures hitting resistance at $76.18 BLL amid overbought RSI levels.  

The subsequent downturn found support at the 61.80% Fibonacci Retracement Golden Ratio. This Golden Ratio now stands as a pivotal point. A high-volume breakdown below the Golden Ratio could signal further declines, potentially revisiting the $67.71 BLL level. Conversely, if it acts as a robust support, a retest of $76.18 BLL becomes plausible upon a breakout above the descending channel pattern.  


As WTI Crude Oil Futures navigates through challenges, a complex interplay of factors shapes its course. While inventory builds and demand concerns weigh on prices, geopolitical tensions act as a counterbalance. The technical landscape, with pivotal points like the Golden Ratio, adds another layer. As markets await inflation data, the delicate equilibrium between supply, demand, and global economic dynamics underscores the nuanced nature of oil futures amid uncertainty. 

Sources: EIA, Reuters, TradingView 

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst 

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