Crude oil fell on profit booking as investors monitored EIA report

  • Kedia Advisory
  • Commodities News
Crude oil fell on profit booking as investors monitored EIA report
Credit: © Reuters.

Crude oil surged by 2.15%, settling at 6071, driven by profit booking amid a complex mix of factors that include the latest EIA report, protests in Libya, and escalating tensions in the Middle East. The EIA Petroleum Status Report revealed a larger-than-expected drawdown in U.S. crude inventories, decreasing by 5.503 million barrels in the week ending December 29, 2023. 

However, concerns emerged as the total product supplied to refineries declined by 2.356 million barrels, signalling a decrease in demand during the period. Stocks at the Cushing, Oklahoma delivery hub increased by 706 thousand barrels, and gasoline stocks saw an unexpected surge of 10.9 million barrels, while distillate fuel inventories rose by 10.09 million barrels, significantly exceeding market expectations. These inventory dynamics contributed to a complex market sentiment as traders weighed supply and demand factors. Protests over high fuel prices in Libya led to the halt of production at the El Sahara oil field, responsible for approximately 300,000 barrels per day. This added to concerns over potential disruptions in global oil supply. 

Technically, the market is undergoing short covering, with open interest remaining unchanged at 14,660. Crude oil's current support is at 5882, with a potential test of 5693 if breached. On the upside, resistance is expected at 6174, and a breakout could lead to a test of 6277. These technical indicators suggest a market influenced by a delicate balance between geopolitical tensions, supply disruptions, and demand fluctuations.

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