On Wednesday (August 14th) during the European trading session, WTI crude oil futures prices fell slightly but stabilized after experiencing a significant sell-off the day before. Oil prices are currently hovering around the critical 50 day moving average, as traders await key economic data from the United States and the weekly inventory report from the Energy Information Administration (EIA).

The cautious tone of the market is driven by ongoing tensions in the Middle East, recent inventory data showing strong demand, and expectations for the latest inflation data from the United States. WTI crude oil was reported at $78.29 per barrel, a decrease of 0.08%.

US inventory decline supports oil prices

The American Petroleum Institute (API) reported that US crude oil inventories have significantly decreased, with inventories dropping by 5.2 million barrels, far exceeding the expected 2 million barrels. This decline is greater than expected, indicating strong demand and providing bullish support for oil prices. Investors are now turning their attention to official data from the Energy Intelligence Agency, which may further affect market sentiment.

CPI data may affect Federal Reserve policies and oil demand

Traders are closely monitoring the upcoming US Consumer Price Index (CPI) report, which is expected to show a 0.2% month on month increase and a 3.2% year-on-year increase in core inflation. The CPI data may affect the Federal Reserve's policy decisions, especially in terms of interest rates. If inflation remains high, the Federal Reserve may postpone interest rate cuts, which could slow down economic growth and affect energy demand. On the contrary, lower inflation may prompt earlier interest rate cuts, thereby boosting economic activity and oil consumption.

Middle East conflict increases upward risk

The geopolitical tensions in the Middle East continue to be the main factor affecting crude oil prices. After a Hamas leader was killed, Iran promised to respond harshly, exacerbating concerns about the outbreak of a broader regional conflict. In response, the United States has deployed more military assets to the region, which has raised concerns about potential disruptions to oil supply. Analysts warn that any upgrade could threaten critical oil transportation routes, putting over 20 million barrels of oil per day at risk.

International Energy Agency lowers demand forecast

Although geopolitical risks have pushed up oil prices, there are also some offsetting factors. The International Energy Agency (IEA) recently lowered its 2025 global oil demand growth forecast, citing weaker than expected economic performance in some parts of the world. The economic slowdown in some parts of the world, especially in the petrochemical industry, is expected to drag down global oil demand growth in the coming years.

Market forecast: mixed feelings

Due to conflicting factors, crude oil prices may continue to fluctuate in the short term. On the one hand, strong demand from the United States and potential supply disruptions in the Middle East may support an increase in oil prices. On the other hand, weaker demand expectations in some parts of the world may limit the increase. Traders should pay attention to EIA inventory data, CPI reports, and any further developments in the Middle East conflict to determine the next market trend. Overall, the outlook remains cautiously optimistic, and geopolitical risks may drive recent price movements.

technical analysis

WTI Crude Oil Daily Chart

WTI crude oil futures struggled to gain traction within the key retracement range of $84.83-70.67 on Wednesday. The resistance level is at the Fibonacci level of $79.42, and the support level is at the 50% level of $77.75.

The market has also stabilized above the 50 day moving average of $78.00, which controls the medium-term trend.

If buyers can recover their upward momentum and break through this week's high of $80.16, WTI crude oil futures may sprint towards the top of $82.33 and $83.11.

Meanwhile, if the 50 day moving average is not held, the price may accelerate towards the 200 day moving average of $75.51.