Crude oil retreated from the day’s high 6591 and is currently trading at 6549, down 1.47%. Yesterday, it inched higher towards 6657 level. Oil prices gave up early gains as markets gauged the potential impact of additional crude sales from the U.S. Strategic Petroleum Reserve. However, caution trading persisted ahead of key data on U.S. inflation, due to be released later today.
The Biden Administration said on Monday that it will sell 26 million barrels of crude from the SPR. As part of a release mandated by Congress. The sale comes after the Dep. of Energy released a record 180M barrels. From the reserve in 2022 to combat rising fuel prices.
The SPR currently stands at 372M barrels – its lowest level since 1983. The latest release is due for bidding on February 28 and is set for delivery between April and June.
But the additional sales also come at a time when U.S. crude markets are flush with supply. While demand has weakened amid pressure on economic activity from high interest rates and inflation.
Also, CRUDE OIL is struggling to cross its 100 SMA on the same time, which is indicating a pull down on every rise, unless it gives a closing above 6750.
Now, Oil prices recently tested 6657 and turned back again, which is creating a probability for a short term correction towards immediate support 6350 again.
However, looking at the news that Russia’s plan to cut its oil production and prospect of demand by CHINA could restrict Crude oil losses in near future.
Hence, a fresh downside momentum could expect from 6550-6540, target would be 6420-6350. Stop loss will be 6615.
Alternatively, possible pullback could expect above 6620 for the upside level 6720.