Crude oil prices are taking a hit this week as the U.S. Energy Information Administration (EIA) reported an unexpected rise in inventories last week. This comes ahead of the Federal Reserve’s upcoming interest rate decision and policy statement, adding to the ongoing market volatility.
US WTI Crude Oil Futures Dip As U.S. Crude Stockpiles Grow
The price of U.S. West Texas Intermediate Crude Oil futures is slightly decreasing following a two-day increase. The decrease is due to an American Petroleum Institute (API) report revealing an unexpected growth in U.S. crude stockpiles last week, indicating a declining need for fuel.
Traders and analysts are waiting for the U.S. Energy Information Administration (EIA) results to verify these signs of reduced crude demand. Furthermore, the June West Texas Intermediate Crude Oil is trading at $69.33, showing a decrease of $0.44 or -0.63% as of 07:16 GMT.
Simultaneously, the United States Oil Fund ETF (USO) closed at $61.24, an increase of $1.45 or +2.42%, compared to Tuesday’s close.
U.S. Crude Oil Inventories Surge Unexpectedly In Defiance Of Predicted Decline
Per the latest API statistics, inventories of U.S. crude oil unexpectedly climbed by 3.3 million barrels in the week ending March 17, in defiance of the predicted decline of approximately 1.6 million barrels.
Moreover, gasoline reserves grew by 2.73 million barrels and distillates by 1.53 million. Besides, in Cushing, Oklahoma, crude oil stockpiles rose by an additional 2.72 million barrels, in addition to the 3.378-million-barrel climb reported the week before.
The cost of oil has experienced downward pressure due to the current situation of the international banking system. Nonetheless, representatives from OPEC+ and analysts are sure that a rise in demand will lift prices soon.
Moreover, some specialists think that the Federal Reserve may pause further rate hikes in response to the uncertainty in the banking industry. On top of that, there is a fear that the global banking crisis may have an even more significant effect on supply than on demand.
Also, the availability of U.S. shale oil could be affected by stricter credit conditions. Meanwhile, the daily swing chart indicates a general overall downtrend.
Nonetheless, momentum is advancing. A hit on the $64.58 support level would continue the downward trend.
However, if a reversal happens, the $80.97 price point would represent a major resistance point with a marked change in direction.