Crude oil price: levels to watch as summer driving season nears its end
- Investors are concerned over the demand outlook as the summer driving season comes to an end.
- Crude oil price has remained largely above $65 even with the spread of the Delta variant.
- As demand dwindles in the near term, $70 may remain an evasive level.
Crude oil price has eased after the three-day rally. WTI futures will likely remain below $70 in the near term while finding support at $65.
On Wednesday, the Energy Information Administration (EIA) confirmed the bullish trend highlighted by the American Petroleum Institute (API). On Tuesday, API had indicated that the US oil stockpiles had dropped by 1.622 million barrels in the week ending on 20th August. While the decline was lower than the forecasted 2.367 million, it was better than the prior week’s 1.163 million.
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As a confirmation of the bullish trend, EIA’s data showed that the US oil inventory fell by 2.979 million barrels. The draw was lesser than the previous 3.234 million barrels but higher than the forecasted 2.683 million. Besides, gasoline stockpiles fell by 2.242 million barrels compared to the expected draw of 1.557 million and prior week’s rise of 0.696 million barrels.
On the one hand, the stockpile data has boosted crude oil price gains from earlier in the week. However, heightened demand concerns are impacting the market. The summer driving season that began in late May buoyed WTI futures to an over three-year high of $76.96. While it has since recorded by about 12.29%, it has largely remained above $65.
As the season comes to an end during the Labor Day weekend at the beginning of September, investors are concerned over the demand status in the medium term. Based on both the fundamentals and technical, crude oil price may remain below $70 as the bulls lack enough momentum to push it to and past that resistance level.
WTI oil technical outlook
Crude oil price has eased after the three-session rally. After dropping to a three-month low of 61.71 on Monday, the benchmark for US oil -WTI futures – has since surged by about 9.86%. However, it lacks enough bullish momentum to break the resistance at $68. At the time of writing, it was down by 0.43% at 67.71.
On a three-hour chart, it is trading above the 25 and 50-day exponential moving averages. In the near term, it may continue to find resistance along 68. If the bulls manage to push it higher, it may hit the two-week high of 69.58 before pulling back to 68.
However, it will likely remain below 70 in the near term as demand concerns curb gains. On the flip side, crude oil price may decline to along the 50-day EMA at 66.57 before rebounding to around the 68 support zone.