WTI rebounds as geopolitical risks offset bearish US inventory buildup

• The barrel rebounds to around $60.80 on Wednesday, up 1.0% for the day.
• The largest inventory build in over three months weighs on sentiment, but traders await official data.
• Geopolitical tensions in the Middle East and the Black Sea support the risk premium on energy.

West Texas Intermediate (WTI) US Oil trades around $60.80 on Wednesday at the time of writing, gaining 1.0% on the day after dipping to the $60.00 region earlier. The market attempts a rebound despite bearish supply signals, as traders await the official Energy Information Administration (EIA) inventory report later in the day.

The American Petroleum Institute (API) reported on Tuesday that US Crude Oil stocks rose by 6.5 million barrels for the week ending October 31, following a 4.0 million-barrel draw in the previous week. According to Oilprice's calculations based on API data, US inventories have posted a net gain of about 3.6 million barrels so far this year. Analysts at ING noted that these figures are "bearish for crude," although the sharp declines in gasoline and distillate inventories support refined product cracks, helping offset some of the pressure on the overall Oil complex.

On the geopolitical front, the risk of escalation remains a key source of support. Ukraine has intensified its strikes on Russian energy infrastructure, claiming an attack on Lukoil's Norsi refinery in Nizhny Novgorod (which processes about 340,000 barrels per day), as well as targeting the Tuapse and Saratov facilities. Any escalation in the Middle East or the Black Sea could reignite supply concerns and sustain the WTI price.

In the short term, confirmation by the EIA of another significant build in US crude inventories could cap WTI's recovery. However, ongoing geopolitical tensions and resilience in refined product demand provide offsetting factors that may stabilize the market in the near term.

WTI Technical Analysis: Crude Oil extends range-bound consolidation

WTI US Oil finds support around $59.90 on Wednesday, starting a rebound to retest the resistance area near $61.00. The intraday price action reflects a continuation of the horizontal consolidation phase that has been in place since October 28, with prices oscillating within a tight range between $59.50 and $61.30.

A breakout above the upper bound of the range could open the door for a test of the next resistance area around $62.50, followed by a potential rally toward the September high near $66.00.

On the downside, the lower limit of the range is reinforced by the 100-period Simple Moving Average (SMA) on the 4-hour chart, currently at $59.46. A decisive break below this level would likely revive selling pressure and expose the October 20 low near $56.00.