Crude oil has received a substantial boost and broke above the consolidation zone where it was stuck.
The WTI was very strong during the trading session on Wednesday. Partially, it was due to inventory data released showing a significant drop in reserves. It was a bullish sign that supports the idea that the economy is picking up. Analysts believe that the market will vibrate upwards, perhaps approaching the level of $65. It is an area where we saw a lot of sales, and therefore it will be interesting to see what happens when the price reaches the region. In any case, the important thing is that the $60 level should offer significant market support.
The Brent oil has also risen during the trading session, breaking above the $66 level. It appears that there is some amount of demand out there, so that factor should continue to drive the market. According to analysts, Brent seems to try to rise to the level of $67.50, which is in an area where we saw significant sales in the past. However, if it dropped, the 50-day exponential moving average would offer a kind of short-term ground. If that happened, analysts think the benchmark could see a rebound later.
Producers May Need to Pump Extra Oil to Meet Expected Demand
It seems that the demand for crude oil is increasing. Furthermore, the IEA and OPEC have revised up their demand forecasts for the remainder of the year. Thus, from now on, this factor will surely bring upward pressure to the market.
US crude inventories shrank by 5.9 million barrels last week, the Energy Information Administration said. It beat analysts’ forecast for a 2.9 million barrel drop. East Coast crude stocks hit a record low.
Gasoline supplies, an indicator of US fuel consumption, increased to 8.9 million barrels per day. According to the IEA report, it is the highest number since August.
Gasoline stocks advanced to 309,000 barrels, less than expectations for a 786,000 barrel increase.
Phil Flynn, a senior analyst at Price Futures Group in Chicago, stated that the report had supported oil prices. He believes the market is going back to more robust demand figures.
Earlier in the session, oil prices rose on a report from the International Energy Agency. It predicted that global oil supply and demand would balance out in the second half of the year.
The IEA added that producers might need to pump an additional 2 million BPD to meet expected demand.
According to John Kilduff, Again Capital Partner, the IEA report is optimistic about the continued pickup in demand, published in a while.