Crude oil hits multi-week high before declining on supply surge

Wednesday witnessed a decrease in crude oil price following an earlier surge. US Crude stocks are still rising more quickly than the markets had predicted. Barrell prices are floored by geopolitical headlines.

Early on Wednesday, WTI crude oil touched new multi-week highs around $78.50, but US barrel counts revealed an unexpected build-up once more, which sent crude oil prices plunging once more.

WTI fell back below $77.00 per barrel as a result of Energy Information Administration (EIA) barrel counts that revealed millions of barrels of excess crude oil supply that investors had not expected to flow through US markets.

These data gnawed away at the prevailing narrative in the energy market about global supply constraints that have yet to materialize.

The EIA reported on Wednesday that US crude oil stocks increased by 12.018 million barrels during the week ending February 9, far exceeding the 2.6 million barrel increase predicted and adding to the 5.521 million barrel accumulation from the previous week.

This is on top of the 8.52 million barrel accumulation the American Petroleum Institute (API) announced on Tuesday for the same time frame. The API supply build was the greatest since November, while the EIA data showed the largest one-week barrel count increase in 12 months.

Crude oil’s downside is still constrained as investors’ attention is diverted by geopolitical developments. This keeps barrel bids elevated as investors start to express greater concern about the prospect of a truce in the ongoing conflict between Israel and Palestinian Hamas in Gaza.

WTI witnessed a significant retreat on Wednesday, despite testing into its highest bids in almost three weeks. This means that US Crude Oil will experience its first down day following seven straight closings in the green.

WTI hit an intraday high of $78.43 before testing $76.50 and then slipping down below the $77.00 barrier. With Wednesday’s decline, US Crude Oil formed a bearish rejection from the 200-day SMA at $77.40.

WTI could continue to move in a choppy manner within a consolidation zone between the 200-day SMA and the 50-day SMA at $73.55.