Crude Oil traders found further cause to restart buying oil prices after the crash yesterday as EIA reported a drop in stocks for the fifth straight week.
Oil prices recovered from its losses last day after the EIA confirmed that stocks in the US declined for the fifth consecutive week cementing confidence within traders that the supply glut led by the US output is on the decline.
EIA said that crude oil stocks dropped 1.52 mln along with gasoline and distillates which were down 2.51 mln and 0.15 mln respectively. The decline was lesser compared to week before but better as the API had forecasted a build in the previous week, the sharp decline in gasoline also helped support prices move higher in intraday.
The market is also expected to keep a close eye on the US-Venezuela situation, as the US may again decide to plan an energy ban on the country which if implemented could trigger a sharp upside in prices. With the US shale supply showing early signs of stagnating, any decisive move on production or compliance in the upcoming meeting could trigger a significant upside in prices.
Crude Oil is trading at Rs.3,170/bbl, up 23 points or 0.73% currently.
The technical picture indicates a resumption of the current uptrend – key support zone comes into play at Rs.3,080-Rs.3,100 and only sustained activity below this level would negate the current strength and call for a sharp downside in prices.
On the upside, resistance points are noted at Rs.3,180 and then further higher at Rs.3,250 this week. Over the course of the next few weeks, we maintain a bullish view on prices and expect it to test Rs.3,300-Rs.3,350.
Source: Commodity Online