- Receding war threats from the US and Iran questions energy bulls while inventory levels increase.
- EIA data and Geopolitical news will be the key to follow.
With an absence of escalation in the US-Iran saga, coupled with higher than forecast API inventory data, WTI is declining to $62.80 during the early Asian session on Wednesday.
Following the US President Donald Trump’s comments that he stands ready to talk to Iran, speculations concerning a war between the two nations declined.
Adding to the optimism was the BBC report quoting the US Defence Secretary Patrick Shanahan that mentioned the potential of attacks by Iran has been “put on hold” by US counter-measures.
While receding fearing of supply outage due to Geopolitical factors initially dragged the black gold down, a weekly release of the US crude oil stock by the American Petroleum Institute (API). The inventory level grew past market forecast of -599,000 barrels to 2.4 million barrels.
It should also be noted that the downside was largely confined as global oil producers recently agreed to hold their supply cut agreement intact for the rest of the year.
Looking forward, official US crude oil stocks change from the Energy Information Administration (EIA) will be in the energy traders’ radar for now. The EIA stockpiles for the week ended on May 17 are likely to decline by -2.530 million barrels from 5.431 million barrels.
50-day simple moving average (SMA) level of $62.10 and $60.30 mark comprising 100-day SMA are likely the key support for the energy benchmark ahead of highlighting $60.00 round-figure.
On the upside, $63.80 and $64.00 can question immediate advances whereas $64.70/80 area including early April highs and $65.70 may challenge buyers then after.