On Wednesday (October 23) during the European session, WTI crude oil prices rebounded, reversing most of Tuesday's gains and staying above $70 during trading, with a decline of about 2%.

Traders are closely monitoring the US government oil inventory data scheduled to be released later today, which may bring new volatility to the market.

Inventory data suppresses prices

Before Wednesday's slight drop in oil prices, data released by the American Petroleum Institute (API) showed that US crude oil inventories increased by 1.64 million barrels last week, far exceeding analysts' expectations of 300000 barrels. The significant increase in crude oil inventories has put pressure on oil prices, especially as traders had expected inventories to only rise slightly.

However, today's Energy Information Administration (EIA) report at 14:30 Greenwich Mean Time (22:30 Beijing Time) will become a key indicator of market trends, predicting an increase of 900000 barrels in US oil supply. If this number exceeds expectations, it may lead to new selling pressure as concerns about oversupply in the US market intensify.

Middle East tensions support oil prices

Despite pessimistic inventory data, the ongoing tension in the Middle East continues to support oil prices. This conflict, especially between Israel and Iran, has made traders nervous and driven demand for crude oil to hedge against the risk of supply disruptions. US Secretary of State Antony Blinken failed to reach a solution after his visit to Israel, which may have contributed to Tuesday's rise. Antony Blinken held extensive talks with Israeli Prime Minister Netanyahu and other senior officials during his visit.

Although there have been no reports of significant breakthroughs, the possibility of long-term conflict remains a key factor in the oil market. Analysts from ING said that traders' pricing reflects the possibility of continued volatility and there will be no solution in the short term. Israel recently confirmed that the leader of Hezbollah, Hashim Safdin, was killed in an attack, which will only exacerbate concerns about the escalation of violence in the region.

Market outlook: bearish bias, significant future volatility

The recent outlook for crude oil prices tends to be bearish, especially if the US Energy Information Administration confirms that inventory increases are higher than expected.

Crude oil traders should be prepared for increased volatility, as inventory data and geopolitical news will determine the next trend of oil prices. The continuous rise in US inventories may push down oil prices, while any escalation of tensions in the Middle East could provide strong support.

Technical Analysis of WTI Crude Oil Prices

If the oil price significantly rises above $72.75, it may push it towards the resistance level of $73.85. Any further increase could push the price towards the level of $75.60. On the contrary, the price may start a new round of decline from the resistance level of $71.85.

The immediate support level is around $70.50. The next major support level is $68.15. If there is a downward breakthrough, the price may drop to $66.00. Any further losses could open the door for it to move towards the $65.00 support zone.