- Summary:
- Despite a bigger-than-expected drop in inventories, crude oil prices failed to sustain gains above their 3-month highs on profit-taking.
Crude oil prices had a volatile end to last week’s trading. WTI crude oil CFDs started Friday’s trading at $61.69. The commodity then hit a new three-month high at $61.98 before falling to an intraday low of $61.25. It was able to recover some of its losses when the crude oil inventories report was released to finish the day at $61.67.
Crude Oil Inventories Post Biggest-Than-Expected Drop
The initial drop in crude oil prices may have been because of profit-taking as the commodity has been consistently closing higher for four consecutive weeks. Meanwhile, the report from the Energy Information Administration (EIA) was bullish for the commodity when it topped forecasts. According to the EIA, the number of crude oil barrels held in inventory fell by 5.5 million barrels in the week ending on December 20. Only a -1.7 million barrel-draw was estimated.
Consequently, the bigger-than-expected decline in inventories pushed crude oil prices higher because it suggests that the US may ramp up demand soon.
For today, there are no oil-related reports due for release. This means that the commodity will likely be vulnerable to market sentiment and the outcome of US reports.
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Crude Oil Price Outlook
On the daily chart of WTI crude oil CFDs, we can see that the price of the commodity is trading above resistance on the falling trend line (from connecting the highs of April 24 and September 17). This could mean that if there are enough buyers in the market, the next resistance level for crude oil prices will be their September highs around $63.23. If resistance at that level does not hold, the next resistance for the commodity to test will be its current year-to-date highs at $66.32.