Crude Prices Rallying Ahead of EIA Release

EIA Up NextCrude oil prices are trading a little firmer today ahead of the latest update from the EIA due later today. On the back of the 3.1-million-barrel deficit reported last week, the market is looking for a further drawdown this week of 1.4 million barrels. Despite the drawdown reported last week, crude prices were unable to breakout to the upside, reflecting the conflicting factors which are constraining oil prices currently. On the one hand, a weaker US Dollar is helping underpin crude while fears over the Chinese economic recovery are acting as a headwind. Added to that, hawkish central bank expectations are keeping yields elevated which are also weighing on oil prices.Near-Term RisksLooking ahead, today’s data would likely need to see a strong downside surprise to help drive oil prices meaningfully higher. With concerns over the demand outlook this year amidst recession fears and increasing supply, oil prices need a change in narrative in order to encourage a strong wave of buying. Consequently, focus today should also be on the latest production numbers as well as refining capacity utilisation rates which should give a stronger insight into the broader supply/demand backdrop for oil currently.Technical ViewsCrudeFor now, crude prices remain firmly ensconced in the 65.34 – 72.61 range which has framed price action over recent weeks. Still capped by the bear trend line also, the risk of a break to the downside unless bulls can clear the 72.61 level and put focus back on 82.59 above.