Originally published by AxiTrader
Oil prices have been rising today, despite an unexpected increase in crude oil inventory. The latest number from the EIA showed an inventory build of 3.6 million barrels for the week to February 8 (vs. 1.3 million barrels previously). Yesterday, private data from the API showed a decrease in crude oil inventories.
Oil has been gaining momentum since Saudi Arabia´s Energy Minister al-Falih announced that the country will cut its output even more than what was agreed in the latest OPEC deal.
The commitment by OPEC and progress made in recent weeks should help to underpin the recovery rally. Aside from the OPEC output reduction already made, the organization is considering even larger cuts in the near-term. Furthermore, there were unexpected outages in Libyan oil fields, as well as a fall in output in Alberta, Canada.
Looking at the charts, the uptrend in both US oil and UK oil both look relatively healthy. The daily RSI is not yet showing overbought conditions. US oil is approaching a key resistance level at $55.50 (also the 38.2 % Fibo of the November-December 2018 decline). A clear break above that level could pave the way for a recovery towards $60.
The UK oil chart looks quite similar - it is currently approaching the 38.2 % Fibo at $64.15. The next big level to watch above that would be $68.40, followed by the 200 DMA around $71.
