Crude Oil prices rallied yesterday as US commercial stockpiles show a slower pace of inventory build up
The weekly Crude Oil inventories report released by the U.S. Energy Information Administration yesterday showed that U.S. commercial crude inventories increased by 1.3 million barrels last week which were lower than the forecasted 2.9 million barrels. As of the week ending March 11th, the total U.S. commercial crude inventory rose to 523.2 million barrels, still considered to be historically high. The report comes after Tuesday evening the American Petroleum Institute (API) reported that inventories rose by 1.5 million barrels for the week ending March 11. This was below the forecasted increase of 3.3 million barrels. The API report also showed that gasoline supplies fell by 1.2 million barrels and distillate stockpiles fell by 830,000 barrels. Oil prices, however, settled the day on a bullish note closing at $38.59 a barrel with 5.25% gains.
The outlook for Oil is that both OPEC and the International Energy Agency (IEA) expect Crude Oil production to fall this year at the expense of US shale operators. Saudi Arabia along with Russia and other Oil producing nations continue to push ahead with arrangements in order to curb the falling prices in Oil, which have also started to take a toll on Saudi Arabia. However cracks still appear as Iran remains committed to keeping oil production high in order to make up for its lost market share, an issue that has been the major point of debate among other countries willing to freeze Oil production.
At the current production levels, supply continues to outstrip demand by nearly 2 million barrels a day.
Crude Oil Technical Outlook
Oil remains bullish on the weekly chart with prices now comfortably trading above the $38.25 handle. The bullish momentum could see Oil gains push prices towards the 45.44 – 44 handle which marks a strong support level last seen in September of 2015 which was eventually broken. Establishing resistance at this untested resistance could see some pullback in Oil above the $38.25 major support.
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