Crude oil prices rebounded strongly at the fourth trading session of the week. The recent surge seen in oil prices is largely attributed to an amazing drop in U.S. crude oil inventories coupled with strong hopes that the U.S Congress will pass the latest stimulus deal.
What we know: At the time of writing this report, Brent crude futures gained 0.92% to $51.55/barrel and West Texas Intermediate futures soared by 1% to trade at $48.30. Both Brent and WTI futures are now trading at their highest levels since early March.
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What this means: Data retrieved from the Energy Information Administration (EIA) revealed a plunge of 3.135 million barrels for the week to December 11. This was much bigger than the 1.937-million-barrel draw oil experts had earlier anticipated, and 15.189-million-barrel build seen last week.
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Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on key fundamentals keeping crude oil bulls all fired up amid the passage of the long-awaited U.S stimulus bill:
“Oil markets got pretty revved up by all the factory yard activity going on in Germany and positive PMI around the globe, which suggests the economic effects of the 2nd and 3rd wave is not nearly as problematic as feared.
“But the clear sentiment ‘tell’ is that crude is trading just short of its recent highs despite the growing restrictions being imposed in response to Covid-19 infection waves.
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“And keenly important for sentiment to hold to the current form, Washington appears to be edging towards a new stimulus bill in the aftermath of President-elect Biden being confirmed by the electoral college and several senior Republicans acknowledging his victory.”
Bottom line: The most recent U.S crude oil inventory numbers excited a significant amount of oil traders enough to increase their buying momentum, keeping both oil major benchmarks above $48/barrel.
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