Crude Rallies to a 10-Week HighCrude has climbed 5.5% this week, as crude inventory reports and a key OPEC meeting have boosted crude prices.
Crude oil prices continue to push higher and are pressing on the $59 level. In the North American session, West Texas Intermediate crude oil futures are trading at $58.75, up $0.44 or 0.76%. Brent crude oil futures are trading at $63.58, up $0.60 or 0.95%.
Crude Soars on EIA Report, OPEC
Crude oil jumped 3.6% on Wednesday, after an unexpectedly strong crude inventory decline. The Energy Information Administration (EIA) weekly report estimated a drawdown of 4.9 million, which was much larger than the estimate of a 1.6 million decline. This figure followed the American Petroleum Institute (API) estimate a decline of 3.72 million barrels, higher than the forecast of a drawdown of 1.79 million. This marked the sharpest drawdown since September.
Aside from this week’s crude inventory reports, oil prices were also supported ahead of a key OPEC meeting on December 5-6. OPEC members are discussing reducing output, in order to combat an expected oversupply of crude in the first half of 2020. OPEC members are technically bound by a production cut of 1.2 million barrels per day, but compliance with production cuts has historically been problematic. If OPEC fails to implement a deeper cut, crude prices could fall as low as $40 per barrel.
WTI/USD continues to break above resistance lines, as crude continues to rally. The pair is testing resistance at 58.50 and is also putting pressure on the next resistance line at 59.25. On the downside, 57.50 has switched to a support role.
I continue to monitor the 50-EMA and 200-EMA lines, which are in close proximity and could converge shortly. Currently, the 200-EMA is at 57.02 and the 50-EMA is at 56.46. If the 50-EMA breaks above the 200-EMA line, this would be a bullish signal (“golden cross”).