Oil Prices Drop as U.S. Stockpiles Rise—Can WTI Hold Above $72.27?
Oil prices dipped on Wednesday as rising U.S. crude inventories and economic uncertainty weighed on market sentiment.
The American Petroleum Institute (API) reported a 9.4 million barrel increase in U.S. crude stockpiles for the week ending February 7. In contrast, gasoline inventories fell by 2.51 million barrels, while distillate stocks dropped by 590,000 barrels, hinting at steady demand for refined products.
The Energy Information Administration (EIA) is set to release official stockpile data, which will provide further insights into supply-demand dynamics. The EIA also raised its U.S. crude production forecast for 2025, now expecting output to average 13.59 million barrels per day (bpd), slightly higher than its previous estimate of 13.55 million bpd.
Despite the supply glut, oil prices found some support from strengthening refining margins. Singapore complex refining margins, a key industry metric, rebounded in February, averaging $3 per barrel after declining in January. Analysts suggest this improvement reflects growing refinery demand as maintenance season approaches in Northwest Europe and Asia.
Tariff Uncertainty and Fed Caution Weigh on Oil Markets
Market sentiment remains cautious as U.S. tariff policies continue to cast uncertainty over global economic growth and energy demand. The Biden administration has implemented and proposed additional tariffs, raising concerns about potential supply chain disruptions and slowing trade activity.
On the macroeconomic front, investors are eyeing U.S. consumer price index (CPI) data, scheduled for release at 1:30 PM GMT on Wednesday. The inflation reading could offer further clues about the Federal Reserve’s next policy moves.
Fed Chair Jerome Powell reaffirmed that the central bank is in no rush to cut interest rates but remains open to adjustments if inflation slows further or labor market conditions weaken. Higher interest rates generally dampen demand for commodities like crude oil by increasing borrowing costs and reducing consumer spending.
WTI Crude Oil Technical Outlook: Bulls Defend Key Support
WTI crude oil has broken out of its downward channel, signaling a potential trend reversal. The price has surged past the $72.27 level, marking a bullish shift after weeks of downside pressure.
Currently, WTI is trading at $73.02, with immediate resistance at $73.65. A successful breakout above this level could trigger further gains toward $74.78, a key price ceiling. However, failure to breach $73.65 may result in a pullback toward the $72.27 support level.
Key Levels to Watch:
-
Support: $72.42, $72.27
-
Resistance: $73.65, $74.78
-
Trend Bias: Bullish above $72.27, cautious below $73.65
The 50-day EMA at $72.42 is providing additional support, reinforcing a bullish outlook. Traders should monitor volume confirmation at resistance levels—a strong breakout above $73.65 could indicate further upside potential, while failure to hold key levels may bring renewed selling pressure.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals