Oil takes a breather in its path toward $100

• Oil (WTI) takes a turn and dips, ending its eight-day winning streak.
• The US Dollar is in a wait-and-see mode ahead of the US Fed interest rate decision.
• Goldman Sachs issues call for Brent crude above $100 within 12 months.

Oil prices are bracing for the weekly numbers from the Energy Information Administration (EIA) this Wednesday. The overnight numbers from the American Petroleum Institute (API) showed a surprise drawdown, by a whopping 5.25 million barrels against the build of 1.174 million barrels last week. Supply cuts and stockpile drawdowns in the US combined with  elevated demand  are pushing both US WTI Crude and Brent prices higher.

The US Dollar (USD) is facing a moment of truth on Wednesday, with US Federal Reserve (Fed) Chairman Jerome Powell taking the stage. Although no hikes are expected, the stakes are very high. Not only did recent data show an uptick in economic activity and a strong labor market, but also inflationary pressures are starting to gain momentum partly due to increasing Oil prices..

Crude Oil (WTI) price trades at $89.22 per barrel and Brent Oil trades at $92.30 at the time of writing. 

Oil news and market movers

• Goldman Sachs has pushed up its forecast for Brent Crude to $100 per barrel. The reasons for the upward revision are the unprecedented levels of global demand while OPEC+ is tightening supply.
• Saudi Arabia is expected to gradually unwind its 1 million barrel per day cut as of Q2 of 2024.
• The EIA is due to release its weekly stockpile numbers around 14:30 GMT on Wednesday. Expectations are for a drawdown of 2.2 million barrels after the build of 3.954 million barrels last week.
• The Fed will communicate its interest rate decision at 18:00 GMT. The US central bank is expected to keep rates on hold at the 5.25%-5.50% range. A statement will be available at the time of the rate communication explaining the decision. Fed Chair Jerome Powell press conference is due at 18:30 GMT.
• Recent numbers show that the Cushing stockage in Oklahoma saw a 42% drawdown in its stockpile for this quarter. This marks the biggest decline on record. 

Oil Technical Analysis: buy on dips

Oil prices are taking a step back this Wednesday morning. Some traders are seeing some profit taking after the drawdown in the API numbers. There is likely more upside to come, so any dip in price action is expected to be bought as current market conditions and expectations remain favorable for Oil prices.

On the upside, the double top from October-November last year at $93.12 remains the level to beat. Although this looks very much in reach, markets have already priced in a lot of possible supply deficits and plenty of bullish outlooks. Should $93.12 be taken out, look for $97.11, the high of August 2022.

On the downside, a pivotal level is at $84.30 from August 10. In case this level does not hold, a substantial nosedive might occur. In such a case, Oil prices might drop to a key floor near $78.00. 

WTI US OIL daily chart