Crude Oil Price: $74 in the Horizon after Largest Draw in 9 Months

Summary:

Crude oil price rose to its highest level since October 2018 as a reaction to the higher-than-expected oil inventory data by API.

Crude oil price has eased as investors await EIA’s inventory data later in the day. Earlier on, WTI futures rose as a reaction to API’s stockpile figures released on Tuesday. According to the institute, the amount of crude oil in storage dropped by 8.537 million barrels for the week ending on 11^th June. The draw is higher than the forecasted drop of 3.000 million barrels and the prior week’s reading of -2.108 million barrels. Notably, it is the highest draw since September 2020.

The better-than-expected oil inventories data signal heightened demand in the ongoing summer travel season. OANDA’s senior market analyst, Edward Moya says, “Everyone is turning overly bullish with crude prices. The crude demand outlook is veery robust as recoveries across the US, Europe and Asia, will have demand return to pre-COVID levels in the second half of next year.”

Investors are now keen on the EIA oil inventory data scheduled for Wednesday afternoon. Analysts expect a draw of 3.290 million barrels, which is lesser than the prior week’s 5.241 million barrels. The figures have been better-than-expected since mid-May.

As for gasoline inventories, the predicted decline of 0.614 million barrels would be a bullish catalyst for crude oil price. In the previous week, the stockpiles rose by 7.046 million barrels.

WTI oil technical outlook

Crude oil price is up by 0.06% at 72.49. Earlier in the day, WTI futures hit its highest level since October 2018 at 72.81. On a two-hour chart, it is trading above the 25 and 50-day exponential moving averages.

I expect it to trade within a tight range of between 72.25 and 72.20 ahead of EIA’s data. Depending on the released figures, it may ease further as it finds support at 71.76. On the flip side, the bulls may push the price towards its next target at 74.