Crude oil prices showed biggest one-day jump in nearly three weeks on Monday. The momentum has slowed down since then, however Brent keeps afloat today moving towards the immediate goal at $66.00, up 0.43% on the day.
The combination of risk-on mode that returned in the global markets and a weakening US dollar has created the proper conditions for extending the upside momentum in commodities. The recent Genscape report showed a drop in crude inventories at the U.S. storage hub in Cushing, which added to the positive dynamics in the oil markets, in addition to the International Energy Agency’s positive comments on global demand growth.
In the short-term, the industry is focused on the news from Houston, where a CERAWeek conference takes place. Traders expect the U.S. producers and OPEC will discuss the current environment in the global oil market and give some encouraging signals that could support prices. The current Brent bullishness is mainly due to these hopes.
Further on, the market will be digesting fresh inventory numbers from API which are due later today. Another build up in crude stocks may derail the impetus and prevent Brent from a break above the $66 threshold, especially if tomorrow’s official data confirm further production growth. In this scenario, the prices could dive below the 64.50 support.
By Helen Rush
Senior Analyst at Capital Markets