Crude Oil Flirting with $57 as Gains Continue

Crude oil continues to post gains this week. In the European session, U.S. West Texas Intermediate crude oil futures are trading at $56.92, up $0.38 or 0.68% on the day. Brent crude oil futures are trading at $63.01 up $0.56 or 0.90%.

Ahead – U.S. Services PMI

The U.S. services sector continues to outperform the manufacturing industry. The latter has been in contraction mode, with two straight readings above the 50-level. The services PMI has not fallen into contraction territory since 2009. The October release, which will be published later on Tuesday, is expected to accelerate to 53.6 points.

Crude Inventories Project Small Surplus

Crude inventory reports continue to have a significant impact on crude prices. The American Petroleum Institute (API) forecast stands at 0.8 million barrels, and an unexpected reading could shake up oil prices. The Energy Information Administration (EIA) is also forecasting a surplus of 0.8 million, compared to the previous release of 5.8 million. The report has shown six surpluses in the past seven weeks, pointing to an oversupply of crude which could put downward pressure on oil prices.

Aramco Announces IPO

Aramco, the Saudi state oil producer, is set to make its shares public for the first time. Saudi Arabia is expected to sell about 1% of the world’s most profitable company, which could yield about $15 billion. It remains to be seen if the projected sale, which is scheduled to take place in December, will affect the movement of oil prices.

Crude Technical Analysis

Crude has pointed upwards for a third straight day and is trading close to 5-week highs. Crude broke through the 50-EMA last week. This line, which is at $55.33, continues to provide support, indicative of an upward trend. Below there is support at $53.00. On the upside, there is resistance at the $58.00 level.