Crude oil futures have once again regained their bullish tone, following the pause and reversal earlier in the week, which saw the July WTI contract drop below the $106 per barrel level, to touch an intraday low of $105.32 per barrel, before recovering to close higher during the oil trading session. This recovery was further reinforced during overnight trading on Globex and has spilled over into today’s session, with the contract climbing back to recover the $107 per barrel level and reinforcing the view that the last few days have merely been a pause, and not a change in trend. Indeed the associated volume also confirms this analysis, with volume of Wednesday being lower than that of Tuesday, and suggesting weak selling pressure as a result. Yesterday’s low volume test confirmed this picture and we can now expect to see oil continue the longer term bullish trend, initially through the $108 per barrel level, and then on to attach the $110 per barrel region in due course.
whilst the technical picture is bullish, Wednesday’s oil stats also added some support, with the crude oil inventories at Cushing showing a slight draw, and in line with market expectations. Overall, crude oil supplies remain tight, providing a further catalyst for upside momentum, to say nothing of the ongoing tensions in Iraq and elsewhere, which may yet deliver an explosive breakout in the short term.
By Anna Coulling