West Texas Intermediate crude traded at the top of its session range as the Energy Information Administration (EIA) indicated that stockpiles declined with cold weather boosting demand for heating fuels. Crude inventories dropped by 444K barrels to 358.1 million in the ending ending on January 31 as forecasts predicted a 2.55 million barrel stockpile addition. Distillate supplies, which include heating oil, fell by 2.36 million barrels to 113.8 million barrels last week, according to the inventory data.
“The cold weather is an ongoing feature and the inventory report helped oil to hold the line at current levels,” said Ric Spooner, chief analyst at CMC Markets. Even though inventories have come in a lower than expected, the volume of crude futures remain 57 percent below the 100-day average.
Crude futures has been rather ranged bound over the last two weeks with price action staying with in a $2-2.50 band. The 4H chart shows that there is a supply zone just above $98 per barrel, between $98.15/50. Shorting within this range could be beneficial as it is an area that extends from the quick breakdown of $100 per barrel back in late December. Although, price action could be pushed up to $99 per barrel.
Nearest support on the 4H chart lies at $96.75. The 200 EMA will provide additional support at $96.26.