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WTI Is Struggling To Stay Over 78.00 USD on the Back of a Joint Oil Reserve Release

November 24, 2021

Talking Points:

  • After a two-day comeback from the monthly low, WTI loses its upward momentum.
  • Japan is watching for the United States and China to unleash their oil reserves, but the markets are sceptical.
  • API inventories increased, EIA stockpile data was released, and the US calendar was set for a new surge.

WTI crude oil prices fell to 78.40 USD in early trading today, after briefly re-testing the weekly high.

The use of the Strategic Petroleum Reserve (SPR) by the US, China, and Japan, combined with pessimistic inventory data from industry reports and a weaker US dollar, has posed a challenge to oil traders recently.

On Tuesday, US President Joe Biden welcomed the US SPR’s largest-ever release. Japan is keeping note of the developments and has announced plans to auction 4.2 million barrels of oil, while China has previously indicated that it is taking steps to reduce inflation pressures caused by rising energy prices.

One news article said that “The United States said on Tuesday it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain, to try to cool prices after OPEC+ producers repeatedly ignored calls for more crude.”

The American Petroleum Institute (API) weekly oil stockpile data, 2.037 million versus 0.655 million prior, also put downward pressure on WTI crude oil prices.

Softer yields and a sluggish US Dollar Index (DXY) pose a challenge to the bearish outlook on oil prices.

Moving forward, several US data and the US Energy Information Administration’s (EIA) weekly official oil inventories, preceding 26B, will be critical to monitor for immediate direction. October Durable Goods Orders, the second estimate of Q3 GDP, the latest FOMC Meeting Minutes, and October core PCE inflation are among the other major catalysts to watch.

Technical Analysis

In addition to a definite rebound from the 100-day SMA level of 74.85 USD, continued trading above the 50-day SMA, which was at 78 USD at the time of publishing, gives WTI oil bulls hope of reaching the psychological level of 80.00 USD.

 

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