WTI crude oil ended Wednesday trying to stabilize after a strong decline on Tuesday. Despite periodic downward breaks of the 80 level, quotes managed to stay above this critical level by the end of trading session. New triggers are needed to resume directional movement as Thursday morning's consolidation continues.
One of those triggers could be the US first GDP estimate for Q4 2022, coming out today. The statistics for the previous quarter surpassed analysts' estimates, and if the positive sentiment persists in today's data, it is likely to be a good sign for another surge in oil prices.
The U.S. crude inventory statistics released by the Energy Information Administration (EIA) proved inventories to hold steady after two weeks of strong growth. Crude oil stock rose only 0.533 million barrels. It is far below both the analysts' forecast of 1 million barrels and the American Petroleum Institute's (API) preliminary data of a 3.4 million-barrel stockpile increase.
The weakest growth in crude oil stocks seen over the past 6 weeks is pushing up fuel demand estimates in the U.S. With more than doubled refineries undertaking maintenance shutdowns this spring, which were delayed in previous years, one can expect crude prices to rise. Refineries need to build up stocks of petroleum products prior to mass maintenance operations, and this will drive up the demand for crude oil.
Higher oil prices are also supported by a sharp upturn in demand for jet fuel around the world, particularly in Asian countries. China may provide strong data on its citizens' trips after the holiday week is over.
The WTI oil price holding above 80 gives an opportunity for another upward wave. The level of 81.7 can be marked as a target.
The following trading strategy can be suggested:
Buy WTI crude oil at the current price. Take profit - 81.7. Stop loss - 79.4.
Traders may also use Trailing stop instead of a fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
