Crude Oil prices edged higher on Thursday, recovered from two-week lows, driven by a decline in U.S. crude and fuel inventories. Brent crude settled at $74.45 per barrel, gaining 0.31%, while U.S. West Texas Intermediate fell to $70.67, down 0.4%.
Earlier, both benchmarks had dropped after OPEC and the IEA cut their demand forecasts for 2024-2025. U.S. crude inventories fell by 2.2 million barrels to 420.6 million barrels in the week ended Oct. 11, the Energy Information Administration said on Thursday, compared with analysts’ expectations in a Reuters poll for a 1.8 million-barrel rise. Gasoline and distillate inventories also fell last week.
North Dakota’s oil output dropped by 500,000 barrels in October due to wildfires affecting key production areas. Meanwhile, the ECB’s third rate cut of the year is seen as a potential boost for oil demand by reducing borrowing costs.
Geopolitical risks from the Middle East, particularly concerns over Israel’s possible retaliation against Iran, kept prices steady. The uncertainty surrounding this conflict remains a factor for future price movements.
Additionally, the dollar surged to an 11-week high, limiting oil gains as a stronger USD typically dampens demand from non-dollar buyers. Investors are also watching for further economic stimulus measures from China, particularly for its struggling property sector.
Technical Outlook – Crude Oil
Crude oil prices saw a smart recovery from the day’s low of 5836, settling at 5897, down 0.44% from the previous close of 5923. After turning negative last Friday and falling from the peak of 6400, the formation of a high wave doji candlestick suggests a potential trend reversal. Wave count analysis indicates that after completing waves A and B, prices are likely to recover towards the previous high, forming wave C.
Traders can consider long positions with a strict stop loss below 5745, targeting 6050-6120 in the near term.
On the downside, a break below 5745 will indicate failure of the wave count, and selling pressure could emerge below it, with a potential drop toward 5620-5540.
Happy Trading!
Commodity Samachar Securities
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