Crude Oil climbs, WTI rises into $75.50 after EIA reports US crude supply drawdown

Crude Oil markets climbed on Wednesday, sending West Texas Intermediate (WTI) into its highest bids in almost six weeks after the Energy Information Administration (EIA) revealed a steeper-than-expected drawdown in US barrel supplies.

China is expected to add additional stimulus to the domestic Chinese economy and reduce the reserve requirements for local banks in an effort to jumpstart flagging business activity. Barrel traders expect the additional business spending to pump up demand for Crude Oil in China.

The EIA reported a surprise drawdown of over 9 million barrels of US Crude Oil Inventories, owing in large part to a recent cold snap that limited logistics and deliveries in several key areas. Despite the drawdown in Crude Oil supplies, energies are shrugging off another surprise buildup in gasoline inventories of 4.913 million barrels of refined gasoline versus the forecast 2 million barrel buildup, adding even further to the previous week’s 3.083 million barrels.

Canada's Trans Mountain pipeline expansion is nearing completion, with the pipeline expected to begin backfilling sometime in February. The pipeline is expected to triple Canada's output of Crude Oil to global markets by the end of the summer season, according to company officials. Canada currently stands as the fourth-largest producer of Crude Oil in the world.

WTI Technical Outlook

WTI Crude Oil climbed above $75.50, setting an intraday high of $75.80 before slipping back to continue testing just above the $75.00 handle. US Crude Oil continues to find technical support from the 200-hour Simple Moving Average (SMA) near $73.50, and near-term technical continue to lean bullish.

Daily candlesticks show a possible technical ceiling at the 200-day SMA near the $78.00 handle as WTI drifts into a congestion zone between the 200-day SMA and a bearish 50-day SMA just below $74.00.

WTI Hourly Chart

WTI Daily Chart