Oil jumps ahead of important Cushing stockpile data

• Oil (WTI) advances over 0.5% as traders brace for weekly EIA data.
• The US Dollar prints another 10-month high as investors flee into the safer Greenback.
• The overnight numbers from the API showed a small build in stockpiles. 

Oil prices are jumping higher this Wednesday with traders bracing for the weekly Energy Information Administration (EIA) report. Although the crude stockpile build or drawdown will be important, traders will zoom in on the Cushing stockpile reserve, which is flirting with decade lows. Another big drawdown of that reserve would mean a big upshift in demand to hit the oil markets and thus higher prices. 

Meanwhile, the US Dollar (USD) keeps posting new highs for the past 40 weeks, with the main  driver this week being the stalemate on Capitol Hill. Both the Senate and the House are pushing bills to the floor, proposals that on its own are not enough to avert a shutdown by October 1. As the deadline looms, it becomes more likely that by Saturday the US government will shut down and markets could be left in the dark on where the US is in terms of macroeconomic conditions. An extended halt would mean that many agencies stop publishing economic data.  

Crude Oil (WTI) price trades at $90.61 per barrel, and Brent Oil trades at $92.95 per barrel at the time of writing. 

Oil news and market movers

• The American Petroleum Institute (API) reported on Tuesday a draw of 1.59M barrels of oil in US commercial storage for the week of September 22.
• The API report also mentioned that Gasoline inventories experienced a draw of 70K barrels for the week, Distillate inventories a draw of 1.7M barrels, and stockpiles at the Cushing (Oklahoma) storage hub  a draw of 828K barrels.
• The Energy Information Administration (EIA) will release its weekly US Petroleum Supply report near 14:30 GMT on Wednesday. Analysts forecast the report will show a decrease of 600K barrels for domestic crude, a decline of 200K barrels for Gasoline, and a drop of 1M barrels in Distillate stocks.
• Saudi Arabia’s Aramco is set to hike its prices on the Asian markets for November crude contracts. 

Oil Technical Analysis: Respect the support levels

Oil prices are heading higher as traders are starting to double down on a possible drawdown of the Cushing storage hub to a decade low. With gas prices rising at the pumps, the US government can only release more reserves in order to make sure prices do not turn into an inflationary force. This means that the US will need to buy crude on the market in order to restock and fill the gap it is creating these past few weeks. 

On the upside, the double top from October and November of last year at $93.12 remains the level to beat. Although this looks very much in reach, markets have already priced in a lot of possible supply deficits and a bullish outlook. Should $93.12 be taken out, look for $97.11, the high of August 2022.

On the downside, a new floor is formed near $88 with the high of September 5 and 11 underpinning the current price action. Proof of that already exists with the dip of September 13 and September 21, which reversed ahead of $88. Should $88 break , the peak of August 10 needs to be enough to catch the dip near $84.20. 

WTI US OIL daily chart