During the Asian session on Wednesday, U.S. crude oil traded at $60.12 per barrel, continuing its downward volatility. In terms of market news, API data showed that U.S. crude oil inventories plunged by 6.5 million barrels in the latest week, far exceeding market expectations of around 1.3 million barrels.
This data suggests a rebound in domestic demand or increased exports in the U.S., while also reflecting that refineries have entered a seasonal expansion phase, significantly accelerating crude oil consumption.
From the supply side, this data is bullish for oil prices. However, WTI oil prices did not see a substantial rebound as a result. The market remains under pressure from a stronger U.S. dollar.
The U.S. Dollar Index remains near the high of around 100, meaning higher costs for overseas buyers purchasing dollar-denominated crude oil, which suppresses demand.
Moreover, despite the sharp drop in inventories, the market remains cautious about the global demand outlook, particularly against the backdrop of slowing economic growth. There are widespread concerns that supplies remain abundant and bullish news is unlikely to translate into a sustained rebound immediately.
Technical indicators also show that bears still hold the upper hand. WTI prices are currently hovering around $60.20 per barrel, with short-term support between $59.65–$60.00. If this level is breached, oil prices could further decline to around $57.30 or even $56.
The previous support zone of $61.50–$62.00 has now turned into resistance, becoming a major obstacle for short-term rebounds. Without an effective breakout, the strength of the oil price rebound will be limited.
The RSI indicator stands at approximately 47, showing weak momentum, indicating that bulls have yet to gain market dominance. Volume distribution also shows significant selling pressure in the $60–$62 range. Overall, although the inventory decline provides some support in the short term, the strong dollar and demand uncertainty continue to constrain the oil price rebound.
Unless WTI breaks above $62 consecutively and recaptures key moving averages, oil prices may remain weak and oscillate near $60.
Editor’s View:
The sharp drop of 6.5 million barrels in inventory is clearly bullish for oil prices, but it is not yet sufficient to reverse the bearish trend. In the short term, oil prices may fluctuate around $60, with downside risks still present; in the medium term, if WTI fails to break through the technical resistance above $62, the rebound is likely to remain limited.
Close attention to subsequent EIA inventory data and the movement of the US dollar will be the key indicator in determining the medium-term trend of oil prices.