Oil prices continue rally ahead of U.S. crude inventories data

Oil prices continue rally ahead of U.S. crude inventories data

Oil Trains First RespondersOil prices rose for a second straight session on Wednesday to set new 2015 highs, ahead of the Energy Information Administration U.S. crude inventory report later in the day.

Crude climbed on Tuesday after protests in eastern Libyan oil port of Zueitina weighed on exports.

Recently, oil prices have benefited from the geopolitical tensions in the oil-rich Middle East and North Africa region.

Simmering tensions continued in Yemen on Wednesday as Saudi Arabia and its allies fired Yemeni towns overnight, after attacks from Houthi rebels, according to witnesses.

While Yemen is a small oil producer, its critical locations on key shipping routes make any tensions affect oil prices.

“Iran’s Supreme Leader Ayatollah Ali Khamenei said on Wednesday that Tehran would not take part in nuclear talks if threatened with military force, state television said, as Iran and world powers try to meet a June 30 deadline for a final deal,” according to a report published by Reuters.

A stall in negotiations between Iran and the West would delay the return of Iranian crude exports, thereby preventing the market from oversupply.

U.S. Crude Oil Stocks

Crude oil supplies in the U.S. plunged by 1.5 million barrels last week, the American Petroleum Institute said late Tuesday.

As of 15:30 GMT, the EIA report may signal a 1.3 million barrels increase in U.S. inventories last week, following a 1.9 million barrels rise a week before.

It seems that the build of U.S. crude oil is starting to subside, which may help crude prices to gain further.

One of the key factors is the drop in the U.S. dollar, where the dollar index resumed its fall for a second straight session on Wednesday to hit a low of 94.69.

Later in the day, a U.S. report may show private-sector employers added 199,000 jobs in April from 189,000 jobs in March.

Brent Outlook

Brent prices set a new high of $69.12 a barrel after the breach of support at $67.60, yet it may face some resistance from the resistance line of the upside channel.

However, more than a sign suggest that the price rally will continue:

-The breakout of strong supports at $63.20 then $67.60.

-The cross of SMA 20 over SMA50 and SMA100 on the daily charts.

-The RSI 14 momentum indicator is still below the overbought areas, which may give the price a chance to resume its bullish direction.

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Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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