Oil climbs to near 4-month highs after Crude inventories decline

The EIA inventory report delivered its second decline in three weeks helping oil prices rise to the highest level in almost four months. The data confirms that the cutting of oil exports by the Saudis is making the US use up their inventories. The weekly EIA release showed a decline of 3.9 million barrels from the prior week, well below the median estimate of a build of 3.0 million barrels and exceeding the lowest estimate which called for a decline of 2.7 million barrels.

Oil prices may have cleared a key hurdle and while the risks to the downside remain, we could see bullish momentum accelerate here. Rising US production concerns remain but oil may not focus on that in the short-term as we may continue to see draws with inventories.

West Texas Intermediate crude tentatively broke above the $58.00 level and if the bullish breakout continues, price could target the psychological $60 handle. Major resistance will come from the 200-day SMA which currently trades at the $62.08 level.

 

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya