By Russell Glaser – Spot crude oil prices have risen to their highest level in the past 3-weeks as the market braces for further signs of tightening in crude oil supplies and a storm in the Caribbean threatens to disrupt production. Currently the commodity is looking to break above the long term moving average line.
The price of spot crude oil has risen to a high today during the European trading session of $78.28, after opening the day at $77.52. This is the highest the commodity has traded since the end of June.
Traders are anticipating the release of the weekly crude oil inventory report from the U.S. Energy Information Administration. Market expectations are for a decrease of 1.1m barrels in crude oil stocks from the previous week. The weekly report has consistently reported a drop in crude oil stocks for the past 3 weeks. These reductions in supplies have also been significantly underestimated. Thus the report has provided a bullish fundamental for crude oil trading.
The weekly crude oil inventory report will be released today at 14:30 GMT time.
Also influencing the price of spot crude oil is a storm that is brewing in the Caribbean that could make landfall in Texas and Louisiana, areas that have make up significant portion of U.S. refinery capacity.
The daily chart below shows the recent bullish trend of spot crude oil prices. A long term trend line has been drawn underneath the recent price action with prices rising since the end of May. If the gains in the price of spot crude oil can hold throughout the day, this would represent a close above the 200-day simple moving average. Further tests of the short term resistance levels of $78.10 and $80 should be in traders’ sights. A long term price target could be the $87 price level.
Forex Market Analysis provided by Forex Yard.
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