WTI declines, crude oil futures expected to settle at $74.30

Oil ignored the official reports issued regarding a sharp decline in US inventories of oil and oil products, to continue the decline for the second consecutive session on Wednesday.

Crude bulls focused on the sharp rise in recession fears besieging the US economy in the recent period, as the US consumer confidence reading highlighted the possibility of the US economy slipping into recession after consumer confidence recorded its lowest level in nine months.

The markets also focused in the past few days on negative earnings reports of some financial sector institutions, as First Republic Bank announced last Monday a decline in its revenues by about $100 billion. The earnings reports of UBS and Credit Suisse also indicated a significant decline in profits, which led to renewed fears of a banking crisis.

WTI crude oil futures decline as crude oil records losses with the trading close, eventually settling at $74.30. WTI crude futures are closing at $74.23 a barrel. The decrease is $2.84 or -3.68%. The day’s low price is currently $74.26, which is slightly below the settlement price. The peak was $79.93.

Technically, the price gap between $75.70 and $79 that existed after the OPEC+ production cut decision from March 31 was filled today.

The day’s opening low was $75.64, which is barely below the low gap level, before it rebounded up to $77.22. In the past three hours, the price has fallen -$2.96 or -3.83%, continuing a downward trend.

On the daily chart, the price has also deviated below a broken trend line and is currently aiming for the 50% retracement level of the rise from the low point of March 20 at $64.36 and the high point of April 12 at $83.53. The next important objective on the downside is the midway level, which is $73.94.

Traders tested the 200-day moving average (green line in the chart above) at the price peak set on April 12. As worries about banking and global growth have grown, the inability to move above that moving average was a bearish technical indicator (which transformed purchasers into sellers).

The price decline today comes despite a sharp drawdown in the crude oil inventory of -5.054M barrels. That was much higher than the -1.486M drawdown expected, but not as great as the approximate 6 million drawdown from the private inventory data released last night.