Crude Oil jumps back above $70 as US inventories fall to lowest level

• Oil prices increase for a fourth straight day this week. 
• The EIA report on Wednesday revealed Cushing Crude Supply fell to a seven-year low. 
• The US Dollar Index trades lower as the focus shifts to the European Central Bank interest-rate decision. 

Crude Oil trades higher for a fourth consecutive day on Thursday, jumping to $70, after a 2.5% price increase on Wednesday. The surge came after the weekly report from the Energy Information Administration (EIA) revealed that US stockpiles at Cushing plunged to just 22.9 million barrels, the lowest level since 2007. Meanwhile, Oil traders largely ignored the latest forecasts from OPEC, which downwardly revised global Oil demand by 210,000 barrels per day. .

The US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is trading softer with the focus shifting towards Europe. The European Central Bank (ECB) will make its last policy decision for 2024, with the most likely scenario being another interest-rate cut amidst controlled inflation and a contraction of economic activity in the region. In the US, Wednesday’s Consumer Price Index (CPI) data appeared to be enough for traders to raise bets on a rate cut for the Federal Reserve meeting next week. 

At the time of writing, Crude Oil (WTI) trades at $69.93 and Brent Crude at $73.30.

Oil news and market movers: US reserves drying up

• The Energy Information Administration (EIA) report on Wednesday revealed that stockpiles at Cushing, Oklahoma, plunged by the most since early September after a 1.3 million barrel drawdown. That brings them to just 22.9 million barrels, their lowest seasonal level since 2007. Lower imports from Canada probably contributed to the draw, Bloomberg reports. 
• In its monthly report, The Organization of Petroleum Exporting Countries (OPEC) chopped projections for consumption growth in 2024 by 210,000 barrels a day to a total of 1.6 million barrels a day, Reuters reports. This means that OPEC has slashed its projections by 27% since July.
• Russian Oil company Rosneft has agreed to supply about 500,000 bpd of crude to Indian refiner Reliance, Reuters reports, citing three people familiar with the matter.

Oil Technical Analysis: It did not take much

Crude Oil price popped higher as volumes start to diminish going into the year-end. Such a spike can happen when markets like the commodity sector are starting to see thinner volumes being traded. Should another leg higher take place this Thursday, the $71.50 level and beyond can not be ruled out before Christmas. 

The 55-day Simple Moving Average (SMA) at $70.04 is being tested and needs to see a hold and daily close above it in order to become support. Further up, $71.46 and the 100-day SMA at $71.19  will act as thick resistance. In case Oil traders can plough through that level, $75.27 is up next as a pivotal level. 

On the downside, it is too early to see if that 55-day SMA will act as support at $70.04. That means that $67.12 – a level that held the price in May and June 2023 – is still the first solid support nearby.  In case that breaks, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart