The latest EIA report shows a decline in crude oil inventories by **2.392 million barrels**, which is more than the expected drop of **1.863 million barrels**. Gasoline inventories also went down, with a decrease of **1.236 million barrels**, compared to a forecast of **2.154 million barrels**. Distillate stocks fell by **1.786 million barrels**, while an increase of **0.885 million barrels** was expected. Additionally, Cushing saw a reduction of **0.838 million barrels**, unlike last week’s gain of **0.419 million**.

Crude Oil Pricing Trends

Crude oil is currently priced at **$63.82**, an increase of **$0.57**. Prices have moved above the **100-hour moving average** at **$63.72**. Although they briefly dipped below this during trading, they bounced back when buyers showed up at the **200-hour moving average**. Earlier, prices fell below this average but gained strength with the inventory data. Both the **100-hour** and **200-hour moving averages** are now key levels for traders. A drop below the **100-hour moving average** could change the current trend, as buyers support the **200-hour average** while sellers challenge the **100-hour level**. Right now, buyers appear to be leading the upward trend. This week’s inventory data sends a bullish signal, especially with crude inventories falling more than expected. The unexpected decline in distillates, which was anticipated to rise, is particularly supportive for prices. This strength is evident in the price movement, which has now regained important short-term levels. Looking ahead, we need to consider the increased risk from hurricane season as September approaches. Current reports indicate a tropical depression is strengthening in the Gulf of Mexico. If it intensifies, it could disrupt the **1.7 million barrels** of daily production in the area. This supply risk was not fully accounted for before today’s report, reminding us of how Hurricane Ida halted production for weeks in 2021. However, we should be cautious. The gasoline inventory drop was smaller than expected, which might suggest that peak summer driving demand is ending. Recent data indicates gasoline consumption is around **9.1 million barrels per day**, but this usually declines by **5-7%** as we enter autumn. This could create a challenge for prices, balancing supply concerns against weakening demand.

Opportunities for Traders

The current technical rebound, combined with fundamental tightness, resembles the price movements we observed in the fourth quarter of 2023 before a major rally. For traders in derivatives, this may be a good time to consider buying near-the-money call options for October expiration to take advantage of potential price increases due to supply disruptions. Using call spreads would be a smart way to manage risk, particularly with the **200-hour moving average** offering a clear stop-loss level. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now