WTI oil price broke above $71 per barrel on Wednesday, extending strong rally of the previous day’s 3.7% advance.
Oil prices are in steep ascend which extends into second consecutive week and supported by several factors.
Initial boost came from OPEC’s decision lower increase of global oil production than market initially expected, which sparked strong rally last Friday.
Supply disruption in Canada, uncertainty over oil exports from Libya further supported oil prices which accelerated after much stronger than expected draw in US crude stocks on Tuesday (API report showed draw of 9.22 million barrels vs 2.5 million barrels draw forecasted).
Tuesday’s strong rally generated bullish signals on close above psychological $70 barrier as well as daily cloud top ($70.39).
Today’s extension above $71.00 opens way towards key resistance at $72.89 (22 May recovery high, the highest since Nov 2014).
Bullish setup of daily techs supports the notion, along with strong bullish sentiment, with focus turning towards release of US EIA crude oil stocks report, due later today, which is forecasted for 2.57 million barrels draw vs previous week’s draw of 5.91 million barrels.
Any surprise at the upside could spark fresh acceleration of oil price.
Conversely, bulls may take a breather on downbeat crude inventories results, with overbought studies expected to support action.
Res: 71.21, 71.86, 72.28, 72.89
Sup: 70.39, 70.00, 69.33, 68.21