U.S.
West Texas Intermediate crude oil futures are trading sharply higher
late Tuesday after a move by the United States and other major oil
consuming countries
to release tens of millions of barrels of oil from reserves to try to
cap prices fell short of some expectations.
The U.S. announcement was for a release of 50 million barrels, the
equivalent of about two and a half days of U.S. demand. India,
meanwhile, said it would release 5 million barrels, while Britain said
it would allow the voluntary release of 1.5 million
barrels of oil from privately held reserves.
As I mentioned the other day, the announcement was telegraphed and
probably priced into the market for days. This means it will have a
limited effect on prices. Furthermore, OPEC and its allies still have
the option of off-setting the move by lower its
production targets when it holds its policy meeting on December 2.
Crude oil prices are rallying shortly before the release of a
weekly inventories report from the American Petroleum Institute (API) at
21:30 GMT on Tuesday. On Wednesday the U.S. Energy Information
Administration (EIA) will release its oil inventory data.
Both reports are expected to show a 1.0-million-barrel draw from crude
stocks.
Technical Analysis
The main trend is down according to the daily swing chart. However,
momentum has shifted to the upside with the confirmation of Monday’s
closing price reversal bottom.
A trade through the daily 100-SMA at $74.25 will negate the closing
price reversal bottom and signal a resumption of the downtrend. The
main trend will change to up on a move through the 4-hourly 200-SMA at
$81.25.
The direction of the WTI oil price into the close on Wednesday will
likely be determined by trader reaction to the daily 50-SMA at $78.74.
expectation today: neutral