Crude oil continues to rise for a third week. On Wednesday, the price of a barrel of Brent crude rose above $77.50, its highest level in almost three months.
Better-than-expected economic data from the US in recent days has fuelled expectations of stronger demand.
At the same time, oil is being helped by the outgoing Biden team's recent ban on offshore oil drilling.
Another factor on the bulls' side is the decline in commercial inventories. Last week's data showed the sixth consecutive week of declines. Although the year-on-year decline is a modest 3.6%, it is hovering near the lower end of the range over the past decade.
The government is reducing the weekly pace of purchases into the oil reserve to 260k barrels from over 1.1m a month earlier, but this is still not enough to tip the balance to the positive side.
Important 200-day moving averages are near $75/bbl for WTI and $78.8/bbl for Brent, separating the downtrend from the uptrend. The North Sea variety still has room to rise by around 2%, while its US counterpart is already testing this line.
According to our observations, the clearer signals for oil come in a weekly timeframe. At the beginning of October, the 50-week level was a resistance that halted the rise. If oil breaks above $75 for WTI and $80 for Brent in the coming week, it could be an important signal for a reversal in growth that could last for months or quarters.
The FxPro Analyst Team