Crude Off Lows As US Inventories Fall

Oil prices were stronger on Wednesday supported by the EIA reporting a US crude inventory drawdown. There have been no further developments announced in regards an agreement on a Gaza ceasefire. The market has been focusing on supply/demand fundamentals again as the geopolitical risk premium unwinds. The USD index rose 0.2%.

• WTI rose 1.1% to $79.22/bbl but has started trading today slightly lower at $79.16. It fell to $76.89 during the European session and then rebounded to $79.27. The bearish theme remains intact and yesterday WTI fell below initial support at $77.55, May 7 low, and approached the next level at $76.07, March 11 low. Initial resistance is at $81.22.
• Brent increased 0.7% to $83.77, close to the intraday high, after a low of $81.71 breaking support at $82.32. Technicals point to the benchmark remaining vulnerable. Initial resistance is at $85.65.
• The EIA reported a US crude stock drawdown of 1.36mn, close to expectations. Gasoline inventories rose 915k and distillate 560k. Refinery utilisation rose 1pp to 88.5%.
• The US Department of Energy has lifted the price it is willing to pay to refill the SPR by $1 to $79.99/bbl. The SPR is at levels close to the lowest in 40 years.