Crude oil hit above $62 a barrel in the intraday for the first time in more than three years after U.S. crude stockpiles shrank by the most since the summer driving season. West Taxes Intermediate (WTI) eased to close at $61.856 a barrel on Thursday after a significant surge over the past two weeks.
Futures jumped 0.6 percent in New York to the highest level since December 2014. The surge of the price has been attributed to increasing demand, especially from China. American crude inventories slipped by 7.42 million barrels last week as refiners boosted operating rates to the highest level in more than a decade, signalling strong demand, the Energy Information Administration said on Thursday.
“The crude oil inventory number was pretty healthy relative to consensus,” Brian Kessens, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. “People are optimistic that there are some tailwinds behind the underlying crude oil price.”
Aside from a robust demand in oil, tightening supply is also playing an important role in driving the price up. The U.S. crude inventories are declining, with Oklahoma sliding below their five-year average. Prices have risen as the Organization of Petroleum Exporting Countries and Russia work to reduce global inventories through output reductions and amid concerns over the stability of the group’s third-biggest producer, Iran.
Technically from what has been shown by the weekly chart, WTI is on the verge of breaking through May 2015’s high of 61.555, which is seen as a key resistance. In the event of it fail to break out over the short term, pullback will likely occur and traders may look for short position on it; otherwise there is a huge space to rise further in the future.
Figure 1: WTICOUSD Weekly
On the daily price chart with the MACD technical study applied, it is still in the rising momentum, with no clear evidence of trend reversal at this moment.
Figure 2: WTICOUSD Daily