Oil Prices Consolidate Above $85 Despite Large EIA Inventory Buildup

WTI Oil continues to remain bullish with Oil prices consolidating above $85, despite the buildup in EIA inventories and lower revisions for Oil demand. Today we saw a 5.8 million barrel buildup in EIA inventories, but after the initial dip to $84.50, WTI crude bounced back up from the support zone down there.

Weekly US Oil Inventory for the Week Ending April 5 by the Energy Information Administration (EIA)

The latest EIA weekly US crude oil inventories report showed a larger-than-expected increase of 5,841K barrels, compared to the forecasted rise of 2,366K barrels. Gasoline inventories rose by 715K barrels, contrary to expectations of a decrease of 1,320K barrels, while distillate inventories increased by 1,659K barrels, also defying expectations of a decline of 1,153K barrels. Crude oil production remained steady at 13.1 million barrels per day (mbpd), unchanged from the previous week.

WTI Crude Oil Chart H4 – Trading Between 2 MAs

The oil market experienced volatility at the beginning of the week, initially opening with a bearish gap lower amid rumors of peace in the Middle East. However, buyers quickly stepped in, closing the gap and pushing WTI oil prices to $87. Today, the market saw a reversal of sentiment, with sellers regaining control and causing WTI oil to drop to the $85.20s and test the 50-day Simple Moving Average (SMA).

The EIA’s downward revision of oil demand forecasts for 2024 and 2025, coupled with a significant buildup in inventories reported today, initially put downward pressure on crude oil prices. However, after the immediate dip, the support level held at $84.50, and oil prices continued to trade within the range defined by the 20-period SMA (grey line) and the 50-period SMA (yellow line) on the 4-hour chart. This indicates a consolidation phase in the market as buyers and sellers assess the latest developments and market fundamentals.

US WTI Crude Oil Live Chart