WTI pushes back to mid-$76.00s despite official crude oil release announcements

• WTI has pushed higher into the mid-$76.00s and is eying resistance at $77.00.
• The US announced it will release 50M barrels of oil over the coming months.

Oil prices have been choppy in recent trade, with front-month WTI futures recently turning highs and reclaiming the $76.00 level despite the much anticipated official announcement by the White House that it will release crude oil reserves. At present, WTI trades around $76.50, a few cents higher on the day and still well within recent $75.00-$77.00 ish ranges.

The $77.00 area presents strong resistance, as it not only marks this week’s high, but also last Thursday’s low. Slightly above that, there is more resistance in the form of a downtrend that has been capping the price action since the tumble from the 9 November high at just under $85.00. For WTI’s technical momentum to turn decisively more positive, it would need to break above this downtrend. In this case, the next target on the upside would be the 50 and 21-day moving averages, which currently reside close to $79.00 and $81.00 respectively.

Crude oil reserve release announcements

Earlier in the session, the White House announced that it would release as much as 50M barrels of oil from the Strategic Petroleum Reserve (SPR). The sale of 18M of these barrels has already been approved by Congress but would be sped up. Alongside the announcement from the US, officials in India announced that they would release 5M barrels from their reserves and there were reports that China could release over 7M barrels. Moreover, Japan was reported to be prepared to release several days' worth of consumption, which analysts said could amount to a release of about 5M barrels of oil.

The announcement by the US and other nations appear to have been roughly in line with what markets had been pricing for and commodity analysts broadly seem to agree that the impact on oil markets will be short-lived. According to a UBS analyst, “SPR releases are a tool used to cover temporary production disruptions and are not useful to fix imbalances caused by lack of investment and still rising demand”.