Crude oil trading outlook: WTI falls ahead of data on inventories; Brent also pressured by US supplies

Expectations for a second week of all-time-high crude oil stockpiles in the US pressured West Texas Intermediate to fall to near a monthly low. Brent also saw bearish trading early in the European session, after sizable gains yesterday on Ukraine.

West Texas Intermediate futures for delivery in June traded for $100.19 per barrel at 7:21 GMT on the New York Mercantile Exchange, dropping 1.08%. The session registered the lowest price in almost a month at $100.14 per barrel. Yesterday the US crude benchmark gained 0.44%.

Meanwhile on the ICE in London, Brent futures for settlement in June recorded a 0.49% loss to trade for $108.45 per barrel at 7:21 GMT, prices ranging from $108.41 to $108.80 per barrel. Brent’s premium to WTI stood at $8.26. Tuesdays session added 0.80% to the contract on tightening sanctions on Russia, while Monday saw prices fall to near a 2-week low of 107.86, registering the biggest drop in almost a month, after news from Libya.

The looming threats over the crisis in Ukraine continue to be the mainstay of support for crude oil. In response to fresh US and EU sanctions, Russian President Vladimir Putin said: “If this continues, we will of course have to think about how (foreign companies) work in the Russian Federation, including in key sectors of the Russian economy such as energy.”

In Ukraine itself the conflict is growing. A number of government buildings were captured by militants in eastern Ukraine on Tuesday, prompting US Secretary of State John Kerry to accuse the Kremlin of escalating the conflict. Still, as many as 40 people, including journalists, international observers, Ukrainian military personnel and pro-western activists, are held hostage in the town of Sloviansk.

BBC analyst David Stern said the pro-Russian militants may be trying to incite a full-blown crackdown by the authorities, in an attempt to provoke an intervention by Moscow. The Kremlin denied there being any Russian personnel in Ukraine, and dismissed the possibility of invading its eastern neighbor. NATO, however, said it had no information that indicates a withdrawal of Russian troops from the Ukrainian border.

Previously, news that Libya is lifting force majeure off of the eastern Zueitina oil exporting harbor pressured crude on Monday, with the European benchmark posting the biggest daily drop since early April. Libya’s crude oil exports sank to 250 000 barrels daily, from 1.4 million a year ago, since rebels took control of four eastern ports last year.

US inventories

Government data on crude oil supplies in the US is due later today, with expectations of stockpiles adding to the record-high figure from last week, pressuring crude. A Bloomberg survey put the gain at 2.2 million barrels for the week ended April 25th, while a Reuters poll suggested inventories have risen by 1.9 million barrels. Bloombergs survey also suggested gasoline stocks fell by 0.9 million barrels, offsetting some positives from probable gains in crude, while distillates added the expected 0.5 million.

Data from the private American Petroleum Institute on Tuesday showed crude supplies added 3 million barrels, while gasoline dropped just 0.049 million barrels, pushing bearish sentiment for the US benchmark.

Technical view

According to Binary Tribune’s daily analysis, in case West Texas Intermediate June future manages to breach the first resistance level at $102.08, it will probably continue up to test $102.89. In case the second key resistance is broken, the US benchmark will probably attempt to advance to $103.57.

If the contract manages to breach the first key support at $100.59, it will probably continue to slide and test $99.91. With this second key support broken, the movement to the downside will probably continue to $99.10.

Meanwhile, Brent will see its first resistance level at $109.57. If breached, it will probably rise and test $110.15. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $110.94.

If Brent manages to penetrate the first key support at $108.20, it will likely continue down to test $107.41. With the second support broken, downside movement may extend to $106.83 per barrel.