- WTI rallies on huge EIA inventory data draw.
- WTI looks to the 60 handle and then 63.79 swing highs.
Oil prices rallied on Wednesday and Pending events, such as the G20 and OPEC, were put o the backburners momentarily. The Energy Information Administration, ( EIA), inventories came back to the fore with the U.S. government reporting a weekly drop of nearly 13 million barrels in domestic crude stocks, reportedly the largest since 2016. The data was much larger than expected draw in crude, exceding expectations by a whopping 10 million barrels. The EIA data also showed that gasoline inventories were down by 1 million barrels. Distillate stockpiles fell 2.4 million barrels last week.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies are slated to hold their meetings on July 1-2, moved from the original date of June 25-26, to discuss what is widely expected to be an extension to the production cuts. Then, we turn to the G20 where leaders will meet in Osaka, Japan which will be including an expected meeting between Chinese President Xi Jinping and US counterpart Donald Trump.
Elsewhere, the Trump administration has turned up the economic pressure on Tehran which is keeping the market on red alert, adding to the upside case for global oil prices. The U.S. is looking to drive the Islamic Republic’s oil exports to zero to prompt nuclear concessions. However, Iran is no pushover and have been outspoken, insisting that the measures spell the “permanent closure” for diplomacy between the two nations, the Associated Press reported.
WTI took out the daily 200-Experiential Moving Average and broke out of the consolidation of the 18th June rally. The 200-D EMA was guarding the May highs of $59.67 which has given way for the $60 psychological level meeting trend line resistance. A break here opens the 63 handle and 63.79 swing highs. On the downside, bears can target back down to the 200 weekly EMA (last week’s low) and the 61.8% Fibo around the 52 handle. Lower down, there are prospects for a correction to back towards the14th Jan 50.41 low and then the 26th November lows at 49.44.