The benchmark West Texas Intermediate (WTI) rallied on Wednesday, jumping around 2.75% and clipping into $70 per barrel after the Energy Information Administration (EIA) reported a steeper drawdown in US crude oil reserves than energy traders anticipated.
The Organisation of the Petroleum Exporting Countries (OPEC) has lowered its forecasts for world crude oil demand growth, however barrel traders are still banking on growing energy demand from China to sop up the extra.
According to the EIA, US Crude Oil Stocks Change for the week that ended December 6 fell by 1.425 mln barrels, below the forecast -1.1 mln and declining further from the previous week’s decline of over 5 mln barrels.
With US crude oil reserve drying up in the pipe, barrel traders found the buy button on the expectation that US processors will be forced to increase the pace of their market buying.
OPEC reduced its forecasts for demand growth in the coming year, dragging the crude oil consortium’s lofty expectations closer in-line with the more demure forecasts posted by the EIA.
OPEC now anticipates that global oil demand will increase by 1.61 mln barrels per day in 2024, a reduction from last month’s forecast of 1.82 mln barrels. Additionally, for 2025, they have revised their growth estimate down to 1.45 mln barrels per day from the previous 1.54 mln barrels.
Crude oil price forecast
Crude Oil prices have been traveling in a rough downside wedge since dipping below $66 per barrel in September. WTI bids, despite finding a technical floor below $68 per barrel, have been unable to decisively pierce above the 50-day Exponential Moving Average (EMA), and intraday price action is poised to continue battling the moving average in the near term.
Despite barrel prices seemingly held aloft of further downside pressure from a bidding zone just north of the $66 key handle, topside momentum remains limited, and Crude Oil bulls will continue to find themselves short-changed as swing highs continue to grind lower below the 200-day EMA near $73.80.
WTI daily chart by TradingView
(Source: OANDA)