- WTI travelling from a high of $57.02 to a low of $55.66, -0.30% on the day.
- All eyes were on the highly anticipated Energy Information Administration.
The price of oil was lower again on Wednesday, travelling from a high of $57.02 to a low of $55.66, -0.30% on the day so far. West Texas Intermediate crude futures also fell Wednesday as U.S. government data revealed another weekly climb in domestic crude inventories and sentiment that Saudi Arabia has restored significant production capacity has pressured prices lower as well.
All eyes were on the highly anticipated Energy Information Administration on Wednesday which showed that U.S. crude supplies had climbed for a second week in a row, by 2.4 million barrels for the week ending September 20th. This was far greater than the expected drop of 190,000 barrels and weighed heavily on WTI prices.
Saudi oil facility attack headlines a driving force
Meanwhile, markets were keeping an ear to the ground over the recent Saudi attack headlines and news had circulated that Saudi Arabia had restored its production capacity to 11.3 million barrels a day which is hugely greater than the 5 million barrels a day that were taken out of production by the attacks. However, the scale of the damage to processing facilities could take a long time to put back which likely limits the capacity to which the facilities can continue to supply oil.
“While we continue to acknowledge that Saudi incentives are aligned to understate the impact of the attacks, reports of it speedy recovery when combined with sustained fears of waning demand growth present a bleak macro picture for crude bulls. The risk of further disruptions, however, may not be fully priced in by market participants who have seemingly taken comfort in their ‘show me the lost barrels’ framework,” analysts at TD Securities argued.
“Crude oil is not ripe for unconditional love, but we suspect that WTI prices ranging in the $58-60/bbl region still seem appropriate for now. In the near-term, however, algorithmic trend followers are still set to ramp up their selling in WTI crude, but we don’t expect a large change in positioning.”
WTI levels
Bears are back in control, testing a key level of support with bulls having lost their footing around a 61.8% Fibo and August resistance just below the 57 handle. In today’s price action, both the 50 and 200-daily moving averages were pierced, but the price was rejected below and they remain a fragile level of support. On the upside, a clearing of the 59 handle will open prospects for the April highs at 66.58 on the wide.
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