Crude oil forecast: Could WTI rebound despite large crude stocks build?

 

 

 

Half an hour after the release of the official weekly oil inventories report, oil prices had not responded significantly, remaining near the session lows. While the Energy Information Administration (EIA) reported a big crude build of 4 million in the week to 7 February, this was well below the substantial 9.4 million that was reported by the American Petroleum Institute (API) overnight. As a result, WTI stopped its earlier declines that were triggered by the API data and after CPI data earlier had stoked inflation concerns, causing a rally in the dollar that made commodities priced in the currency less appealing. Let’s see if oil will be able to now resume its rally from earlier in the week, or whether demand concerns would intensify and hold back prices. Given the overall bullish structure on WTI, we are giving the bulls the benefit of the doubt and are not too bearish on the crude oil forecast yet.

 

Official stockpiles not as bearish as API data

 

For the week ending 7 February, the EIA reported that crude stocks surged by 4.070M barrels, while those at Cushing climbed by 0.872M barrels. However, stocks of gasoline fell by 3.035M barrels, offering some balance to the supply picture. Crucially this was more than the drop the API had reported overnight.

 

Earlier, oil prices were already struggling, and looked to end a three-day winning streak. Concerns were raised after the API crude inventories data and broader economic concerns had dampened market sentiment. The API data had revealed a substantial build of 9.4 million barrels in crude stockpiles for the week ending 7th February, highlighting softer demand.

 

Crude oil forecast: EIA revises US oil production upwards

 

Adding to the bearish tone, the EIA had revised its US crude oil production forecast upwards, projecting an average output of 13.59 million barrels per day in 2025—an increase from its previous estimate of 13.55 million barrels. This signals continued supply-side resilience, reinforcing expectations that US producers remain well-positioned to meet demand despite fluctuating prices. Notably, while production estimates have been lifted, the EIA has kept its demand outlook unchanged, suggesting a potentially oversupplied market should economic headwinds persist.  However, I should add that the market had already expected increased production under Trump’s leadership anyway, so this wasn’t much of new news.

 

 

Trade tensions and impact on oil prices

 

Beyond supply and demand fundamentals, geopolitical risks and trade tensions are playing a crucial role in shaping market sentiment. Concerns over escalating trade frictions continue to cast a shadow over global growth prospects, with implications for oil demand. If trade conflicts escalate further, the prospect of slower economic expansion could weigh heavily on energy markets, adding another layer of uncertainty to crude oil forecast.

 

WTI technical analysis

 

Source: TradingView.com

 

Since peaking in January at just below the $80 level, WTI has been making a series of lower lows and broken several support levels as traders priced in Trump’s bearish energy agenda. But this week, we have seen a big bounce from the area around $70.00 to $70.70, which was where priced broke out from at the end of December. Additionally, a bullish trend line going back to September also came into play there and provided additional support.

 

However, the rally has since faltered somewhat as prices tested old support around $73.00, leading to a sizeable 1.5% decline in the first half of today’s session. WTI was now testing interim support around the $71.60 to $72.00 zone at the time of writing. This area needs to hold on a daily closing basis if the bulls are to maintain control of price action. Else, we could see a dip back down to the abovementioned $70.00-$71.00 support zone again.

 

 

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

 

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