Crude oil prices traded to their new three-month highs at $61.43 in yesterday’s trading. WTI crude oil CFDs opened at $60.80 and finished the New York session at $61.11 as the latest inventories report continue to push prices higher. Of course, it also helps that China announced import tariff exemptions for oil products from the US.
US Crude Oil Inventories Continue to Push Prices Higher
If you remember, the latest report from the Energy Information Administration (EIA) showed that the number of crude oil in commercial storage was 1.1 million barrels lower. While this missed the forecast which was for a 1.5 million barrel-decline, it still had a bullish effect on crude oil prices. This was mainly because an earlier report showed a surge of 4.4 million barrels of oil. The negative reading was enough for market participants to push prices higher.
China Exempts US Companies from Tariffs
Yesterday, China also announced that it would exempt 6 US-based chemical and oil companies from tariffs starting on December 26 until next year. Companies like the Dow Chemical, Exxon Mobil, and Chevron Phillips Chemical stand to benefit the most from the move. It is said that these companies have been working to make China their primary market.
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Crude Oil Price Outlook
On the 1-hour chart, we can see that the rising trend line which I pointed out yesterday still looks valid. In fact, crude oil prices pulled back enough to test support at the trend line. For today, we could see the same thing happen. The commodity still has some room to move lower to the $61.00 handle. This level coincides with the trend line as well as the 61.8% Fib level when you draw the Fibonacci retracement tool from yesterday’s low to yesterday’s high. If support does not hold at the psychological handle, crude oil prices may fall to its December 18 lows around $60.30.
On the other hand, if buyers continue to dominate today’s trading, we may not even see a deeper pull back to the trend line. Crude oil prices could find enough bids at where it is currently trading at $61.20. If it does, we could see the commodity make its way to its year-to-date highs at $63.28.
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