Crude Oil Forecast, WTI, EIA, US Exports, Economic Data – Talking Points

• A softer US Dollar aided commodity prices on Wednesday, including WTI and Brent oil
• US inventory data sent prices higher as export demand rose ahead of Russian fuel ban
• WTI takes aim at the October high after piercing above the 50-day Simple Moving Average

WTI Crude oil prices are nearly unchanged in Asia-Pacific trading as equity indexes across the region trade higher against a softer US Dollar. On Wednesday, WTI and Brent crude prices rose over 3% as a pullback in the US Dollar, and inventory data aided the commodity. A drop in Treasury yields reflected easing FOMC rate hike bets as traders mull cooling economic data points.

China reported stronger-than-expected GDP growth for the third quarter, but oil imports fell by 2% from a year before in September. Factory activity in October contracted in the United States, the United Kingdom, and the Euro Area, according to S&P Global PMI data released over the past week. The impact of higher rates from the Federal Reserve, the Bank of England, and the European Central Bank appear to be trickling down into the economy.

The US Energy Information Administration’s weekly report crossed the wires on Wednesday. US crude oil stocks rose 2.58 million barrels for the week ending October 21, which was more than double the 1.03 million barrel build analysts expected. However, gasoline stocks fell by 1.48 million barrels, and distillate stocks saw only a modest 170k barrel increase.

Distillate fuels, which include diesel, are around 20% below the 5-year average compared to the same period last year, according to the EIA summary report. Europe is ordering as much fuel as possible before the February ban on Russian products takes effect. The Biden administration is reportedly considering banning exports, but no decision has been made yet.

It isn’t just international diesel demand, US crude oil exports hit a record high at 5.1 million barrels per day. A surge in the spread between WTI and Brent prices, which rose to over $8 per barrel last week, the highest level since July, has fueled overseas demand. That drove the bullish sentiment in WTI, with traders brushing off the better-than-expected headline figure. Inventory data and high-impact economic prints will likely influence sentiment in the coming weeks.

Image Source: eia.gov

WTI Crude Oil Technical Outlook

A move above the 50-day Simple Moving Average (SMA) puts WTI prices on track to test the October high at 93.72. The falling 100-day SMA may temper gains short of that mark, however. A drop back below the 50-day SMA would likely see bearish sentiment take hold and push prices down to trendline support.

WTI Crude Oil Daily Chart

Chart created with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

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