US Crude Oil Price Edges Higher, Back Towards $70 Mark
Crude oil price, news and analysis:
- The US crude oil price is strengthening modestly as inventories fall and Saudi Arabia suspends some exports.
- A minor move lower in the US Dollar over the last few sessions and progress in the EU/US trade talks are helping it too.
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Crude oil price strengthens
The price of US crude oil is heading higher again after its sharp fall from just above $74/barrel on July 3 to below $67 on July 18. While the rally so far has been shallow, it could have the momentum to take it back to the psychologically important $70 level.
US Crude Oil Price Chart, Hourly Timeframe (July 18-26, 2018)
Four factors are currently aiding oil’s recovery. First, US crude oil inventories dropped heavily last week, according to the US Energy Information Administration. Stockpiles fell by 6.1 million barrels – much more than the consensus forecast of a 2.3 million decline – to their lowest level since February 2015.
Second, Saudi Arabia has warned that it is halting temporarily all oil shipments through the Red Sea shipping lane of Bab al-Mandeb after an attack on two large oil tankers there by Yemen's Houthi rebels, who are backed by the Saudis’ Iranian rivals. Kuwait is considering following Saudi Arabia's lead by halting oil exports through the strait too.
Third, commodity prices are being helped more generally by growing optimism about the trade talks between the US and the EU – which have agreed to hold off on further tariffs while they negotiate. And fourth, the US Dollar has declined modestly over the last few sessions on hopes that a full-scale trans-Atlantic trade war can be averted.
If the rally extends to the $70 mark, the May high at $72.88 could be the next target, followed by the July high at $74.09. To the downside, support lies at the $66.32 July low and then the $63.41 June low.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.