WTI rises above $72 in post-settlement trade after API reports large draw in crude oil inventories

Supply worries drive oil prices higher on Tuesday.
API's report shows crude oil inventories fell 2.1 million barrels in the week to October 12.
WTI's recovery extend into the third straight day.

Eren Sengezer FXStreet

The barrel of West Texas Intermediate gained traction in the post-settlement trade after the weekly data released by the American Petroleum Institute revealed a surprise draw in crude oil inventories in the U.S. As of writing, the WTI was up 0.66% on the day at $72.15.

Crude inventories decreased by 2.1 million barrels to 408.5 million in the week ending October 12, the API said. Further details of the report showed gasoline stocks fell by 3.4 million barrels.

Earlier in the day, Reuters reported that Mohammed Barkindo, Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), said that India was projected to see the largest additional oil demand (3.7 percent per annum) and the fastest growth in the period to 2040. Commenting on the market conditions, "Our view is that the market is currently adequately supplied and well balanced. For 2019, there is the potential for an imbalance, due to larger growth in supply,” Barkindo further added.

In addition to these comments, escalating political tensions between Saudi Arabia and the United States and the potential negative impact on Saudi oil supply provided an additional boost to crude oil. Meanwhile, responding to U.S. President Donald Trump's call for lower oil prices, “The oil market is suffering from short supply and this cannot be resolved by words. Trump thinks he can bring the oil prices down by bullying,” Iran´s Oil Minister Bijan Zanganeh.

"The focus within the oil trade during the next couple of weeks is likely to be on Iran and Saudi Arabia. We don't expect the Kingdom to be as accommodative to the White House requests for stronger production" Jim Ritterbusch, president of Ritterbusch and Associates, told Reuters.

Technical levels to consider

The initial resistance for the pair could be seen at $72.80 (20-DMA) ahead of $73.70 (Sep. 28 high) and $75 (psychological level). On the downside, supports could be seen at $71 (daily low), $70 (psychological level/50-DMA) and $68.50 (Sep. 17 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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