Crude Oil Prices Rally to 3-month Highs Ahead of Inventories Data
Crude oil prices traded to their 3-month highs in yesterday’s trading. WTI crude oil CFDs opened at $60.19 and bottomed at $59.98. The commodity then continued to trade higher, flirting with the $61.00 handle, before finishing the day at $60.50.
Inventories Reports to Dictate Crude Oil Prices
While there were no reports listed for oil yesterday, the American Petroleum Institute (API) released data on oil inventories. According to it, there is a surplus of 4.7 million barrels of oil in the week ending in December 11. It supposedly was only estimated to be at 1.288 million barrels.
However, data from the EIA (Energy Information Administration) is not yet due until later today. At 3:30 pm GMT, the market’s closely-tracked report is eyed to show that there was a shortage of 1.5 million barrels last week. A figure lower than this forecast could help propel crude oil prices to $61.00 or even higher because it would suggest that demand would soon pick up.
Risk Appetite from Phase One Deal Continued to Linger
It could be that the rally in crude oil prices yesterday can be attributed to risk appetite. Remember that the US announced a phase one deal last Friday. Additional tariffs were supposed to be implemented last December 15. Now that those have been cancelled, it is one less uncertainty for the markets to worry about.
On the hourly chart, we can see that crude oil prices have been trading higher. This is evidenced by the rising trend line from connecting the higher lows of December 11, December 12, December 13, and December 17. The trend line also coincides nicely with the 50% Fib level (when you draw from the low of December 17 to its intra-day high. Bullish candles at this level may suggest that there are enough buyers in the markets to push crude oil prices to the $61.00 psychological handle.
On the other hand, a strong close below $60.50 may mean that the commodity may revisit yesterday’s lows at the $60.00 handle.