Oil steady after 5% decline on Tuesday, ahead of weekly EIA numbers

• WTI Oil  falls to a near six-month-low.
• The US Dollar is steady and looks for direction. 
• Oil faces risk of falling to $74 should Wednesday’s EIA stockpile numbers point to an even bigger build.

Oil prices had their second worst performance of the past six months. At the beginning of October crude price had to endure a 6% drop in one trading day and on Tuesday it printed a near 5% devaluation of the benchmark Oil price. The decline accelerated when the overnight American Petroleum Institute (API) numbers revealed a big build in stockpile of 11.9 million barrels. 

Meanwhile, The US Dollar (USD) was trading stronger in a move to recover some of its incurred losses from last week. Add a peculiar rate hike from the Australian Central Bank on Tuesday morning, and traders were starting to second guess if the Fed would venture to hike still one more time. The US Dollar Index (DXY) stays afloat above 105, though it is looking for direction. 

Crude Oil (WTI) trades at $77.21 per barrel, and Brent Oil trades at $81.52 per barrel at the time of writing. 

Oil news and market movers

• Earning season in both the US and Europe have been rather negative, which means that less demand for Oil could be at hand in the coming quarter.
• The outlook for China’s demand for Oil is not looking great: refining margins are narrowing, stockpiles are building and air travel has made it back to pre-pandemic levels and demand. The recent disappointing data on China exports adds to more worries. 
• The weekly American Petroleum Institute Crude Stockpile numbers revealed a build of 11.9 million barrels against the previous build of 1.374 million.  
• Around 15:30 GMT, the Energy Information Agency (EIA) is due to print its recent stockpile numbers. The previous build was of 0.774 million barrels – no projections pencilled in. 

Oil Technical Analysis: OPEC+ will need to do more

Oil prices are gearing up to only go one way: lower. That is at least under the current conditions. More and more negative signals from the demand side are screaming for a price correction in WTI and Brent Crude futures. Expect to see more declines at hand until OPEC+ issues more supply cuts to meet the faded demand. 

On the upside, $80 is the new resistance to watch out for. Should Crude be able to jump higher again, look for $84 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93 could come back into play.

On the downside, traders are bracing for trading in this psychological region near $78. The area should see ample support for buying. Any further drops below this level might see a firm nosedive move, which would likely cause Oil prices to sink below $70.

US Crude (Daily Chart)