EIA Data Supports Crude

Oil prices are starting the day on a softer footing with the crude futures market cooling from yesterday’s highs. Crude rallied yesterday on the latest EIA inventories update recording an unexpected draw in commercial stockpiles. Inventory levels dipped by around 1-million barrels, extending the decline from the prior week’s huge 9-million-barrel deficit and falling below expectations for a 1-million-barrel increase.

Supply Concerns

While not a major surprise the data was enough to feed into bullish crude sentiment and help lift prices to their highest levels of the week. The wider backdrop for crude has seen traders concerned over supply levels given ongoing sanctions on Russian crude, disruptions in Venezuelan production and more recently disruptions in Kurdish exports too. Crude prices are around 4% higher off the weekly lows and have continued to advance despite a stronger US Dollar.

Russia-NATO Fears

Concerns around Russian provocation of NATO remain a big bullish driver too. Recent Russian incursions into US airspace and increasingly hostile rhetoric from EU leaders and recently President Trump, are keeping investors on edge. While still seen as an outside scenario, the prospect of any direct Russian-NATO confrontation is keeping rude prices underpinned for now with the market likely to move higher in response to news of any furtehr such incidents or any escalation of Russian-Ukraine violence.

Technical Views

Crude

The market is back above the 63.83 level now and while this level holds as support, focus is on a continuation higher towards the 67.45 level next with a break there opening a test of 72.61 as the higher bull objective. Momentum studies are mildly bullish here but still lacking conviction. If we turn lower again, 57.41 is the level to watch.