Crude oil prices have surged the most in the last eight weeks following a weekly report on crude oil inventories in the U.S., as for the first time in the last month, inventories rose less than expected while refineries increased demand. As a sell-off had already been ongoing in the market, a strong reaction from investors occurred after the report from the U.S. Energy Information Administration (EIA).
– With an oversupply in the market and the possibility of an even stronger dollar, particularly after the latest statements from the FOMC of the U.S. Federal Reserve, the potential for crude oil price increases is currently limited. At the same time, a strong correction of the lower boundaries from Tuesday may help determine the lowest levels for current trading ratios. The upper price should be at 50 percent and 61.8 percent for a short-term pullback, considering the sell-off from October, at $46.75 and $47.75 respectively – explains Ole Hansen from Saxo Bank, adding that WTI crude oil also found price support at the beginning of the week, which, combined with increased market sell-off, explains the significant price jumps.
Other data supporting the recovery of crude oil prices includes another weekly increase in the refinery sector, along with a reduction in gasoline inventories. Oil production has stabilized over the last eight weeks but remains high at 9.1 million barrels, which negatively impacts prices, concludes Hansen from the Danish investment bank.
