Crude Oil Price Extends Gains as API Data Heightens Optimism

Summary:

Crude oil price is trading higher after API's inventory data heightened the ongoing optimism on the recovery of global oil demand.

Crude oil price has extended its prior gains as a reaction to API’s US oil inventory data. Late on Tuesday, the institute indicated that weekly stockpiles had declined by 2.108 million barrels. Notably, the figure is lower than the prior week’s decline of 5.360 million barrels and the forecasted draw of 3.576 million barrels. However, it still represents a recovery in oil demand.

Investors are now keen on EIA’s stockpile figures on Wednesday afternoon. In the prior release, the agency indicated that crude oil inventories had dropped by 5.080 million barrels. The significant decline came as more people traveled during the Memorial Day weekend. Analysts expect a lesser draw of 2.036 million barrels for the past week. Besides, gasoline inventories are expected to have increased by 0.698 million barrels compared to the prior rise of 1.500 million barrels.

WTI technical outlook

Crude oil price is up by 0.45% at 70.33. WTI futures have extended its gains from the prior session when it hit an intraday low of 68.45. Earlier in the day, it hit an intraday high of 70.65, which is its highest level since October 2018. On a two-hour chart, it is trading above the 25 and 50-day exponential moving averages.

I expect crude oil price to find some resistance at 70.65. If the bulls manage to push the price past that level, the next target will be at 71.50. On the flip side, it is likely to find support at 70 or lower at 69.50.