Crude oil trading outlook: WTI futures hold steady ahead of inventories data, Ukraine tension

Crude oil futures remained relatively stable during early European trading hours, as the crisis in Ukraine is still supporting prices, with deescalation measures agreed-upon in Geneva evidently failing. On other fronts, US crude stocks are predicted to have risen last week, though significant losses are unlikely, due to a decline in gasoline inventories.

On the New York Mercantile Exchange West Texas Intermediate futures for settlement in June were down 0.15% to trade for $103.49 per barrel at 7:20 GMT, reversing yesterdays gain of 0.27%. The US benchmark scored daily high and low at $103.65 and $103.35 respectively.

Meanwhile, on the ICE Brent futures due in June remained almost dead-even with yesterday close, marking a 0.01% drop in prices to trade for $109.94 per barrel at 7:21 GMT. Prices shifted between $110.05 and $108.89, having closed 0.38% higher on Monday. The European benchmarks premium to WTI was at $6.43, narrowing yesterdays gap of $6.50, based on closing prices.

The crisis in Ukraine remains the foremost factor in supporting high crude oil prices, as tensions remain strained with both the pro-Russian separatists and the central government seemingly not implementing the agreed-upon measures in Geneva the previous week. The four-way peace talks resulted in a deal to disarm all militant groups in the country, including both the pro-Russian separatists and the ultra-nationalist Right Sector, and the discontinuation of occupation of government buildings by the militias.

Russian exterior minister Sergei Lavrov accused the interim government of inciting the violence: “All signs show that Kiev cant, or doesnt want to, control the extremists,” he said, in context of the fatal shooting that took place at a separatist-controlled checkpoint near Sloviansk on Sunday – two days after the Geneva meeting. At the same time, occupation of buildings in the eastern regions of the country continues, as militants refuse to recognize the governments legitimacy.

Meanwhile, US vice-president Joe Biden is landing in Ukraine today for a 2-day visit, set to underscore American support for the government and to offer assistance in the economic and in the energy distribution sectors.

US Stockpiles

Oil inventories reports are due today – by the American Petroleum Institute – a private body, and tomorrow – by the Energy Information Administration. A Bloomberg survey median forecasts that crude supplies will have risen by 3 million barrels for the week through April 18th, pushing down on prices, while gasoline stockpiles are said to have fallen by nearly 1.9 million barrels, capping any major shift downward. Distillate fuel inventories, which include diesel and heating oil, likely dropped by 300 000 barrels.

Last week US crude oil supplies jumped by 10.0 million barrels to 394.1 million, sharply exceeding the median estimate of analysts surveyed by Bloomberg for a moderate 1.75-million-barrel jump. This was the steepest build up in more than ten years, while gasoline decreased by only 0.15 million barrels, though the EIA reported that gasoline consumption was at the highest level since January.

Technical view

According to Binary Tribune’s daily analysis, in case WTI June crude manages to breach the first resistance level at $104.00, it will probably continue up to test $104.35. In case the second key resistance is broken, the US benchmark will probably attempt to advance to $104.87.

If the contract manages to breach the first key support at $103.13, it will probably continue to slide and test $102.61. With this second key support broken, the movement to the downside will probably continue to $102.26.

Meanwhile, Brent will see its first resistance level at $110.37. If breached, it will probably rise and test $110.79. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $111.53.

If Brent manages to penetrate the first key support at $109.21, it will likely continue down to test $108.47. With the second support broken, downside movement may extend to $108.05 per barrel.