Oil Prices Climb On U.S Inventory Decline

Fundamental Analysis

* Supply Squeeze: Oil prices rose during Asian trading on Wednesday, nearing two-month highs. This increase was driven by industry data showing a significant drawdown in U.S. inventories over the past week, boosting demand optimism. The American Petroleum Institute reported a decrease of nearly 9.2 million barrels in U.S. inventories for the week ending June 28, significantly higher than the expected draw of 0.15 million barrels. This data, often a precursor to similar official figures expected later on Wednesday, raised hopes for increased U.S. demand during the travel-heavy summer season. Additionally, the American Automobile Association forecasted record road travel this week due to the Independence Day holiday on Thursday.

Technical Analysis

* Technical Breakout: Crude oil price was traded higher following prior rebound from the support level 82.75. MACD which illustrate diminishing bearish momentum signal suggest the commodity to extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 84.35. Conversely, a potential correction is also to be expected and the price could head towards 81.40 after it breaks below the level 82.75.

Potential Risks

Looking ahead, the market is expected to focus on further comments from the Federal Reserve and key labor market data for additional economic cues. Additionally, investors will be closely monitoring developments in the Middle East, where tensions between Israel and Hezbollah show little signs of easing, potentially disrupting supply.

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Monitoring

Stay updated on US data, central bank update, Middle East developments and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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