During Thursday's Asian trading session, US crude oil continued its downward trend, trading at $59.59 per barrel. On the news front, the latest weekly report from the US Energy Information Administration (EIA) showed a significant increase in US commercial crude oil inventories, with inventories rising by 5.202 million barrels, far exceeding the market's original estimate of 600,000 barrels.

This data not only exceeded market expectations, but also contrasted sharply with the previous week's sharp decline of 6.858 million barrels, indicating a significant change in the supply of US crude oil and a rapid shift in market sentiment towards a more cautious outlook on supply and demand.

The sudden increase in inventory is mainly due to the rise in crude oil imports, which has caused supply to recover faster than demand.

Institutional View: The surge in inventories reflects a rapid return to supply, which will continue to suppress the upside potential of oil prices in the short term. Despite the significant accumulation of inventories on the supply side, end-consumer demand remains relatively resilient.

The report shows that gasoline inventories fell by 4.7 million barrels and distillate fuel inventories fell by 643,000 barrels, both marking the fifth consecutive week of decline, indicating that end-user demand remains robust. However, the large accumulation of inventories has masked the positive demand-side factors, leading to a pessimistic investor sentiment.

Oil prices weakened rapidly after the inventory data was released. Energy analysts pointed out that the increase in inventories "offset the bullish signal from the previous week's decline, and the market is more cautious about the outlook for oil prices."

From a daily chart perspective, WTI crude oil has fallen for several consecutive days, with prices dropping to near the key support level of $59.50. Structurally, the price has broken below the short-term moving average combination (MA10 and MA20), and the MACD indicator's death cross continues to expand, indicating that bears are in control.

The RSI indicator is currently operating in the weak zone, and no obvious divergence signal has yet appeared, indicating that the bulls have not yet formed an effective counterattack. From a technical perspective, if oil prices continue to fall below the key support level of $59, it could open up downside potential to $58 or even $56.8.

Only if the price returns above $61.50 will the bulls have a chance to reverse the downtrend.


Editor's Note:

The current market landscape has rapidly shifted from a logic of "demand supporting oil prices" to one of "supply expansion suppressing oil prices," with the accumulated inventory of 5.202 million barrels sufficient to alter market sentiment. Although the continuous decline in gasoline and distillate fuel inventories indicates that demand remains resilient, the positive demand factors are insufficient to offset the pressure on the supply side, and oil prices will remain weak in the short term.

From a technical perspective, WTI crude oil broke below key moving averages and touched a support zone on the daily chart, indicating a continued downward trend in the short term. If inventories continue to accumulate, oil prices could test the important support level of $59 or even fall further. Attention should be paid to subsequent inventory trends and changes in import volumes; if inventories increase for two consecutive weeks, the downside potential for oil prices will further expand.