Crude Oil rally eases after US stockpiles grow more than expected

• Crude Oil struggles to hold onto $70.00, with more downside expected. 
• Traders expect sluggish demand in the long term as markets reprice Fed rate cut prospects. 
• The US Dollar Index looks set for more upside after breaking above 103.80 and tested 104.00.

Crude Oil sees its two-day surge halt on Wednesday after the American Petroleum Institute (API) reported a larger-than-expected increase in US stockpiles. In the Middle East, Secretary of State Antony Blinken urged Israel to avoid further escalating the conflict within Iran. Blinken said in Tel Aviv that there is an opportunity for a hostage agreement, according to Bloomberg. This takes the sting out a bit from the recent developments between Israel and Iran. 

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is picking up a nudge and has broken above 104.00. Markets are starting to position for the most eventful week of this financial year with the US presidential election on November 5 and the Federal Reserve’s (Fed) interest-rate decision on November 7. The King Dollar seems to be returning to the scene while traders and investors trim their exposure on bonds and equities, fleeing to the Greenback. 

At the time of writing, Crude Oil (WTI) trades at $70.28 and Brent Crude at $74.37

Oil news and market movers: Blinken soothes again

• The American Petroleum Institute (API) has reported overnight that the US stockpile change number came in at a build of 1.643 million barrels, more than the expected 0.7 million and the previous draw last week of 1.58 million barrels.
• The Energy Information Administration (EIA) will report its numbers at 14:30 GMT. The expectation is for a small build of 0.7 million barrels after the chunky drawdown of 2.191 million barrels a week earlier. 
• Secretary of State Antony Blinken held extensive conversations with Israeli Prime Minister Benjamin Netanyahu and senior Israeli leaders. Blinken urged Israel to get more humanitarian aid into Gaza, a senior State Department official confirmed to Reuters.

Oil Technical Analysis: Brief blips 

Crude Oil price might have had a brief rally, popping back above $70.00. However, the underlying fundamental driver is the oversupply of barrels of Oil per day that is being unleashed to markets. In case the stockpile numbers from the EIA point to a bigger-than-expected build, expect to see how the consolidation in Oil prices fades and Oil pulls back to $70.00 or lower. 

There is a challenging path to recovery for Crude Oil in the coming days. First, the pivotal level at $71.46, which was strong enough to catch the falling knife on October 14, must be regained again with a daily close above it. Once from there, the hefty technical level at $75.13, with the 100-day Simple Moving Average (SMA) and a few pivotal lines, is possibly the first big hurdle ahead. 

On the downside, traders need to look much lower, at $67.12, a level that supported the price in May andJune 2023. In case that level breaks, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart