Oil (Brent, WTI) Analysis

• (EIA) US storage data reveals massive inventory builds as many fear weaker demand
• Softer economic data continues to flow in for the US (NFP, CPI, retail sales)
• IG client sentiment offers few clues on potential price path despite net-long positioning
• The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

Brent Crude Under Even More Pressure After Stock Builds

Delayed and current EIA data for the week ending the 3rd and 10th of November revealed massive increases in crude storage, weighing heavily on the price. Deteriorating economic data has illuminated the path for lower oil prices but the recent accumulation of oil stocks has simply exacerbated the current sell-off.

Brent now trades around the 50% Fibonacci retracement of the broader 2020 to 2022 advance and well below the $82 and psychological $80 mark. The next level of support appears all the way at $71.45 but the market is likely to enter oversold territory before nearing such a level with resistance back at $82.

Oil prices have declines as the global growth slowdown continues to weigh on economic activity and we are even seeing a deterioration in relatively well performing US data.

Brent Crude Oil Daily Chart

Source: TradingView, prepared by Richard Snow

The weekly chart shows the major 2020 to 2022 advance along with the many geopolitical shocks of the last three, nearly four years from the pandemic to the Russian invasion of Ukraine and now the conflict in the middle east and worsening data. $71.50 is a key level and OPEC may already be weighing up the possibility of further supply cuts.

Brent Crude Oil Weekly Chart

Source: TradingView, prepared by Richard Snow

The WTI crude chart reveals a very similar move but shows the near-term level of support at $72.50 followed by the Biden administrations former target band of $67 to $72 to replenish SPR levels – something that was later stated would take years to conduct.

WTI Crude Oil Daily Chart

Source: TradingView, prepared by Richard Snow

IG Client Sentiment Mixed Despite Net-Long Positioning

Oil- US Crude:Retail trader data shows 83.28% of traders are net-long with the ratio of traders long to short at 4.98 to 1.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsOil- US Crude prices may continue to fall.

Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Oil - US Crude trading bias.

Learn how to read and interpret IG client sentiment data to better inform your trading process by reading our dedicated guide below:

https://www.dailyfx.com/news/oil-price-outlookoil-price-outlook-brent-and-wti-suffer-further-losses-brent-and-wti-suffer-further-losses-20231116.html