On Wednesday, oil witnessed a slight drop then quickly recovered due to market expectations regarding US Crude Oil Inventory data.
Early in the session, oil prices went down slightly after hitting the highest level in 6 months yesterday, as the impact of supply disruptions from Nigeria and Canada were offset by the rising supply from elsewhere.
According to data from Iran, oil exports are on track to recover faster than analysts had predicted. In particular, exports from this OPEC member are set to surge in to 2.1 million barrels per day in May, up nearly 60 percent in comparison with their level a year ago. This showed that Iran was trying to regain its market share in the battle with Saudi Arabia.
According to Ian Bremmer, the president of political risk consultancy Eurasia Group, Saudi Arabia is about to raise its oil production by as much as 1 million barrel per day in the next months to squeeze the Iranians.
On concerns of the continuous global glut, International Brent crude futures dropped 23 cents compared with their last settlement to as low as $49.05. US West Texas Intermediate (WTI) crude futures were trading at $48.15 per barrel, down 16 cents.
However, the price quickly regained its momentum in the European session due to market expectations of a fall in US crude oil inventories. The number of crude oil barrels held in inventory by commercial firms during the last week is expected to drop by 3.1 million barrels, after witnessing a draw down of 3.4 million barrels the week before.
Fig. WTI D1 Technical Chart
WTI is on course to soar as high as $49.15. The commodity has gained continuously since February 24 as seen in the green parabolics sar band appearing below the price chart. RSI is hovering around level 71, indicating that the price is in overbought territory. The price is anticipated to surge further as the buying power is still very strong.
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