Commodity Market: US Crude Oil falls from multi-year highs on surprise US oil inventory build

Futures on US West Texas Intermediate Crude Oil retreated for a second straight trading day on Thursday after a surprise increase in US crude oil stocks raised concerns over weaker demand.

The official report by the US Energy Information Administration (EIA) showed yesterday that crude oil inventories had risen by 2.346 million barrels to 420.8 million barrels during the week ended October 1st, while marking a second consecutive period of increase. Analysts on average had anticipated a drop by 0.418 million barrels.

US gasoline inventories also rose last week, up by 3.256 million barrels, while confounding market expectations of a 0.279 million drop.

OPEC+ members said on Monday that the group would continue with its plan to increase oil output gradually, which triggered a surge in prices to multi-year highs.

“The producer group’s statement that its approach should reduce market volatility contrasts with the higher volatility that comes with tighter markets, especially when inventories are historically low,” Citi analysts wrote in an investor note.

“Near-term, oil price movements look skewed to the upside, given growing market tightness with higher Chinese buying and incremental oil demand from the critically tight gas market for the power sector,” they added.

Oil prices have soared more than 50% so far this year, while adding to inflationary pressure that could weigh on recovery from the coronavirus pandemic.

As of 8:18 GMT on Thursday WTI Crude Oil Futures were retreating 1.90% to trade at $75.96 per barrel, while moving within a daily range of $75.89-$77.23 per barrel. Yesterday the black liquid climbed as high as $79.78 per barrel, which has been its strongest price level since November 10th 2014 ($79.85 per barrel). WTI Crude Oil Futures have risen 0.83% so far in October, following another 9.53% gain in September.

At the same time, Brent Oil Futures were losing 1.83% on the day to trade at $79.34 per barrel, while moving within a daily range of $79.10-$81.12 per barrel. Yesterday the commodity climbed as high as $83.45 per barrel, which has been its strongest price level since October 10th 2018 ($85.14 per barrel). Brent Oil Futures have risen 1.75% so far in October, following another 9.28% gain in September.

Daily Pivot Levels (traditional method of calculation) – WTI Crude Oil Futures

Central Pivot – $78.01
R1 – $79.20
R2 – $80.96
R3 – $82.15
R4 – $83.33

S1 – $76.25
S2 – $75.06
S3 – $73.30
S4 – $71.53

Daily Pivot Levels (traditional method of calculation) – Brent Oil Futures

Central Pivot – $81.63
R1 – $82.64
R2 – $84.46
R3 – $85.47
R4 – $86.48

S1 – $79.81
S2 – $78.80
S3 – $76.98
S4 – $75.16