Crude oil prices saw a 0.85% increase yesterday, closing at 6081, mostly due to worries about possible Middle Eastern supply and trade disruptions. Geopolitical unrest increased as the United States declared it would take additional military action against groups that received support from Iran. Escalating tensions in the area.
Concerns about supply disruptions and lingering worries about China’s economic recovery clouded the prospect for global demand. And diminishing expectations of an early interest rate reduce by the US Federal Reserve.
The oil production for the year is predict by Azerbaijan’s energy ministry to be 29.5 million metric tonnes, down from 30.2 million tonnes the previous year. Contrary to expectations of a 217,000-barrel draw. U.S. crude inventories increased by 1.2 million barrels to 420.7 million barrels in the week ending January 26.
Nonetheless, during that same time frame, inventories at the delivery hub in Cushing, Oklahoma, decreased by 2 million barrels. The United States Commodity Futures Trading Commission data indicates that money managers raised their net long positions in the United States crude futures and options (CFTC).
During the week ending January 30, the speculator group increased its total position in futures. And options in New York and London by 18,082 contracts to 117,226.
Technically speaking, short-covering is taking place in the market as evidenced by the 3.29% decline in open interest, which settled at 13,170. The level of 5993 is providing support for crude oil prices.
And a breach below it could trigger a test of 5904. Resistance is seen at 6130 on the upside. And a move above it could push prices all the way up to 6178.