Crude oil price has seen a significant drop since last week reaching 66.80 USD, showing a drop of more than 10% as global trade uncertainty combined with a Saudi offer of added crude for Asia is boosting market volatility. Moreover, futures in New York edged lower in after-hours trading after the American Petroleum Institute was said to announce that nationwide crude inventories rose 629,000 barrels last week. Today, the Energy Information Administration will release this week’s Crude Oil Inventories data. The data released are used as growth and Inflationary indicators but given how volatile crude oil is it could put even more downward pressure on Crude or allow it to make a recovery.
Last week’s data announced, have shown a change in the number of barrels of crude oil held in inventory by commercial firms by -12.6 million barrels, while the forecasted figure was -4.1 million barrels. Under other circumstances, the price of crude oil should have risen because if there is a shortage of supply on the market, the prices tend to increase, but as mentioned above Saudi Arabia offered added crude oil supply for Asia.
For this week’s announcement the forecasted change in the number of barrels is -3.4 million. If the increase in crude oil inventories is higher than expected, it implies weaker demand which could have a bearish effect on crude oil prices and vice versa.
Should the bullish take over, markets would expect the Crude oil to potentially surpass the support level formed at 66.70 USD and reach for the next resistance level at 67.80, aiming for the psychological zone at 68.70 USD. Should the bearish take over, we may see the Crude oil breaking the support level at 66.20 USD as low as the support level at 65.60 USD.