Crude oil prices rallied yesterday as data from the US show a lower-than-expected inventory. WTI crude slid below $54.80 before it skyrocketed to a high of $57.24. It finished the day with a $1.82 gain at $56.98.
According to the US Energy Information Administration (EIA), crude oil inventories increased by 1.4 million barrels for the week ending in November 15. This figure was what market participants were expecting. However, crude oil prices surged on the fact that this is the lowest increase in inventory that we have seen since October 23.
It also helped that Russian President Vladimir Putin clarified speculations about him dissenting in the upcoming OPEC meeting in December. He announced yesterday that Russia will continue to support OPEC’s move in further reducing output. Since December 2018, the bloc has reduced oil production by 1.2 million barrels daily.
Concerns in the Middle East may have also contributed to the rally. Reports were released yesterday that Iran-backed rebels seized a Saudi warplane which may have caused jitters among market participants.
The surge in crude oil prices was enough to erase the losses on Tuesday which were brought about by US-China trade tensions.
In order for WTI Crude to rally to the upper end of the rising channel we pointed out yesterday, buyers will need to clear resistance at the $57.00 psychological handle. A close above yesterday’s high could mean that there’s enough buying pressure for crude oil price to test resistance at its monthly highs around $58.00.
On the other hand, if sellers dominate today’s trading, you can look at the area around $55.20 for potential support.