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Crude Oil Surges for the Third Day Amid Geopolitical Tensions and Ignored Stockpile Data
Commodity
Summary:
Crude oil prices climbed for the third consecutive day on Wednesday, nearing the $70 mark, driven by escalating geopolitical tensions between Russia and Ukraine.
Buy
CLOSEDWTI
End Time
69.697
Entry Price
72.000
TP
69.000
SL
69.978 +0.994 +1.44%
697
Points
Loss
69.000
SL
68.998
CLOSING
69.697
Entry Price
72.000
TP
Crude oil prices continued their upward momentum on Wednesday, marking the third consecutive day of gains. The rally was fueled by geopolitical risks overshadowing bearish inventory data, with traders fixated on developments in the Russia-Ukraine war. As of writing, West Texas Intermediate (WTI) crude is trading at $69.57 per barrel, while Brent crude has climbed to $73.36.
The escalation in geopolitical tensions has gripped market sentiment, placing crude oil on a bullish trajectory despite a significant rise in US inventories. On Tuesday, the American Petroleum Institute (API) reported a sharp increase of 4.753 million barrels in crude oil stockpiles for the week ending November 15, far exceeding expectations of a modest 0.8 million-barrel build. Typically, such a sizeable increase would weigh heavily on prices, but the markets have seemingly shrugged off the data in favor of headline risks tied to the intensifying conflict in Eastern Europe.
This sentiment-driven rally underscores the growing importance of geopolitical events in dictating price action, as traders assess the broader implications of an extended conflict in Ukraine on global oil supply chains.
While geopolitical risks dominate the narrative, the API's stockpile data paints a bearish picture for crude oil. The latest report revealed a stark contrast to the previous week, where inventories saw a drawdown of 0.777 million barrels.
Later on Wednesday, the Energy Information Administration (EIA) will release its official weekly crude stockpile data. Market expectations are for a modest build of 0.4 million barrels, far below the API's reported increase. If the EIA data aligns with or surpasses API's figures, it could test the resilience of crude's bullish momentum.
Adding to the supply side, Norway's Equinor announced that it had restored full output capacity at its Johan Sverdrup oilfield in the North Sea following a power outage. This development, reported by Reuters, could add further downward pressure on crude prices, yet the current geopolitical risk premium appears to overshadow such fundamentals.
In parallel with oil's upward move, the US Dollar Index (DXY) is also showing strength, supported by risk-on sentiment in equity markets and anticipation of Nvidia's earnings report. Nvidia, a bellwether for the tech sector, is set to release its results after the US market closes.
Additionally, traders are keeping a close eye on Federal Reserve officials scheduled to speak later in the day. With inflation concerns still looming, any indication of the Fed's stance on future rate hikes could influence the broader market, including commodities.
Technical Analysis
From a technical perspective, WTI crude has rebounded from a double-bottom pattern formed near the $67.00 level. This formation mirrors a similar setup observed on October 1, which preceded a notable rally.
Currently, WTI is testing the 200-hour moving average, with a golden cross on the hourly chart signaling a potential continuation of the bullish trend. A decisive break above the psychological $70.00 level could pave the way for further gains, with $70.58 as the first key resistance. Surpassing this could see prices extend towards the $72.15 mark, a significant bullish target.
However, the bullish scenario remains contingent on WTI holding above $68.64. A break below this level could invalidate the upward momentum and shift the focus back to downside risks.
TRADE RECOMMENDATION
BUY WTI
ENTRY PRICE : 69.70
STOP LOSS: 69.00
TAKE PROFIT: 72.00
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