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  • WTI hovers near multi-month highs reached Wednesday. 
  • Prices look set to extend the three-week winning streak. 
  • Concerns about a supply glut ease with the drop in the US inventories.

WTI is trading near two-month highs reached Wednesday and appears set to end the week on a positive note. 

A barrel of black gold is currently changing hands at $33.68. Prices hit a high of $33.78 on Wednesday – the level last seen on March 11. 

At press time, prices are up 14% on a week-to-date basis. If the gains are held through Friday’s close, it would be WTI’s fourth straight weekly rise. Prices jumped 19%, 25% and 16% in the preceding three weeks. 

Supply glut eases 

A fourth straight weekly gain looks likely, as there are signs the market is rebalancing. 

The Energy Information Administration (EIA) on Wednesday reported an oil inventory draw of 5 million barrels for the week to May 15. Stockpiles had dropped by 700,000 barrels in the preceding week. 

Notably, stocks at the Cushing, Oklahoma, delivery hub dropped by a record 5.6 million barrels. 

The bullish inventory report pushed WTI higher on Wednesday and is likely keeping the front-month contract better bid during Thursday’s Asian trading hours. 

While the US stockpiles are falling, other major producers led by Saudi Arabia and Russia are adhering to the output cut deal agreed in April and which came into effect on May 1. Under the deal, major producers have agreed to cut production by 9.7 million barrels a day in May and June. 

Even so, oil prices may face downside pressures if the escalating US-China tension weighs over the risk assets, and reopening of economies across the globe leads to the second wave of the coronavirus. 

Technical levels