Crude Rallying on Inventories Data

Oil prices are pushing higher today with crude futures close to testing the December highs. The latest inventories report from the EIA yesterday recorded a heavy 9.5 million barre drawdown, far deeper than the 1.5 million-barrel draw the market was looking for. This comes on the back of a 2.5-million-barrel decline over the prior week. Storms in the US recently have caused major disruption to US crude supply, allowing demand to catch up and eat into stockpiles. This dynamic is keeping oil prices supported for now and looks likely to continue near-term while refiners work through the fallout.

Chinese Stimulus News

Alongside supply disruptions in the US, news of potential Chinese stimulus is also helping boost the demand outlook for crude. Reports emerged this week regarding plans for a near $300 billion stock market support package which traders anticipate will likely be accompanied by other measures. The prospect of fiscal support in China is being cheered by oil bulls given the expected impact on demand. While this optimism continues, oil prices look likely to continue higher near-term.

Technical Views

Crude Oil

The rally in crude oil has seen the market breaking back above the bear channel highs and the 72.61 level resistance. Price is now fast approaching a test of the 77.64 level and with momentum studies moving higher, the focus is on a break higher here. 82.59 sits above as the next bull target should we break local resistance. 

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