Crude Oil continues thin recovery, WTI struggles to reclaim $74

• Crude Oil prices grind higher in thin markets.
• Price recovery hobbled by another supplies buildup.
• Geopolitical risks remain key driver for bullish price momentum.

West Texas Intermediate (WTI) US Crude Oil is taking halting steps higher on Wednesday, trying to stake ground above $74.00 per barrel as another buildup in US barrel stocks keeps prices pinned on the low end.

The Energy Information Administration (EIA) warned this week that the US could see a significant slowdown in its pace of Crude Oil production growth after hitting record pumping numbers in 2023. 

According to the EIA, the US is set to see overall Crude Oil production to expand by an average of 160K barrels per day through 2024 after last year’s record 1.02 million barrel per day production expansion. US Crude Oil is seen rising to 13.21 million bpd through 2024 and then climbing to 13.49 million bpd in 2025.

The EUA reported that US Crude Oil inventories climbed by 5.521 million barrels for the week ended February 2, well above the forecast 1.895 million barrel buildup. Crude Oil stocks climbed an additional 1.234 million barrels the previous week.

Geopolitical risks remain a key support for Crude Oil prices as ceasefire talks between Israel and Palestinian Hamas continue despite frictions, and coalition naval forces continue to squeeze Iranian-backed Houthi rebels out of the Red Sea. 

The Yemeni rebel group remains determined to continue attacking civilian cargo ships transiting the Red Sea in a major shipping lane that connects Asia and Europe by way of the Suez Canal. Houthis fired on two civilian ships this week, keeping tensions in the Middle East tightened.

WTI technical outlook

WTI US Crude Oil is struggling to reclaim the $74.00 handle on Wednesday, but remains bolstered into the high side as barrel bids continue to recover after a near-term plunge into $71.50 last week. Price action remains constrained on the south side of the 200-hour Simple Moving Average (SMA) near the $75.00 handle.

WTI remains down after a near-term rejection from the 200-day SMA just below the $78.00 handle, and US Crude Oil continues to trade into the middle of a medium-term congestion range that has hampered price momentum since declining below the 200-day SMA in November.

WTI hourly chart

WTI daily chart