At the beginning of the week, investors believed that the price of crude oil would continue to rise. This is because they expected the crude oil supplies to continue decreasing as the sanctions on Iran neared. They also expected the amount of crude oil inventories to reduce.
However, things changed when the price of WTI crude started to decrease from the previous high of $76.8. This week, it reached an intraday low of $70.46. This happened primarily because of the crude oil inventories.
On Wednesday, API released numbers that showed that inventories in the US had increased to more than 9 million barrels. This was higher than the 2.5 million barrels they were expecting. Yesterday, the numbers from the EIA showed that the inventories had increased to more than 5 million barrels. This was higher than the 2.5 million barrels that traders were expecting.
In addition, comments from the Organization of Petroleum Exporting Countries (OPEC) showed that the volatility in the oil markets may continue. He said that the forces affecting the price of crude oil were currently out of reach of the member countries. As he said this, a new report indicated that OPEC members had allowed the increase of supplies to cover the gap created by OPEC.
In the Asian session today, the price of crude oil decreased to a low of $70.75. This was the lowest level since a week ago. On the four-hour chart below, it shows that this decrease marked the end of the inverted cup and handle pattern. This means that while the price will remain being volatile, it will potentially see some gains later today or next week.
