US West Texas Intermediate and international benchmark Brent crude oil futures ended higher last week amid supply concerns, as global demand continues to improve as pandemic conditions ease. .
“The tight supply continues to benefit inventories in all regions,” ANZ Research said in a note.
Last week, December WTI crude oil was $ 73.61, up $ 2.23 or + 3.12% and December Brent crude oil closed at $ 77.23, up of $ 2.67 or + 3.46%.
The current rally is led by traders willing to buy strength or new highs. This means that they really want it and buy with conviction. Potential targets on the upside are a series of previous major highs at $ 74.77, $ 76.07 and $ 76.98. Removing the latter could push prices up to the psychological level of $ 80.00.
American Petroleum Institute Weekly Inventory Report
The American Petroleum Institute (API) announced Tuesday night a drop in crude oil inventories of 6.108 million barrels for the week ending September 17. Analysts were expecting a drop of 2.400 million barrels for the week.
The API also reported a withdrawal of gasoline inventories of 432,000 barrels for the week ending September 17 – compared to the draw of 2,761 barrels the week before. Distillate inventories have seen inventories decline this week of 2.720 million barrels for the week, compared to the decline of 2.888 million barrels last week.
Cushing inventories fell 1.748 million barrels this week after falling 1.345 million barrels last week.
US Energy Information Administration Weekly Inventory Report
Crude oil inventories in the United States last week fell to their lowest in nearly three years as gasoline inventories rose, the Energy Information Administration said on Wednesday.
Crude inventories fell 3.5 million barrels during the week of September 17 to 414 million barrels, compared to analysts’ expectations in a Reuters poll for a drop of 2.4 million barrels. Inventories are now at their lowest level since October 2018, and this tension, coupled with strong demand, has helped push oil prices up.
Breaking optimism, US gasoline inventories rose 3.5 million barrels to 221.6 million barrels, from an expected drop of 1.1 million barrels.
Distillate inventories, which include diesel and heating oil, fell 2.6 million barrels from expectations of a drop of 1.2 million barrels.
This is a supply driven rally, so keep monitoring activity in the weekly API and EIA reports. Demand will continue to have a greater influence on prices as concerns about the pandemic subside.
There is, however, another bullish wildcard. Reports last week indicated that OPEC and its allies once again struggled to pump enough oil in August to meet global demand as it recovers from the coronavirus pandemic, potentially adding to the pressures on the rise in oil prices, Reuters reported.
A perfect storm could be brewing for an upward price spike. However, the gains could be limited if the US dollar strengthens, if gasoline demand declines due to seasonal pressures or production jumps in the Gulf region.
For an overview of all of today’s economic events, check out our economic calendar.
This article originally appeared on FX Empire