WTI surges into $75.50 after EIA report

Crude oil prices surged on the energy markets after US supplies fell more than anticipated. The US’s crude stockpiles saw a sharp decline, but refined petrol saw an increase, according to the EIA. Logistics for crude oil were hindered by the cold, but demand is predicted to rise due to Chinese stimulus.

Wednesday saw a surge in the price of crude oil as the Energy Information Administration disclosed a sharper-than-expected decline in US barrel supply, pushing WTI to its highest prices in nearly six weeks.

In an attempt to revive faltering business activity, China is predicted to lower the reserve requirements for regional banks and provide more support to the Chinese domestic economy. Barrell dealers anticipate that China’s demand for crude oil will rise as a result of the increased business investment.

A recent cold snap that hampered delivery and logistics in a number of crucial places was mostly to blame for the unexpected drop of almost 9 million barrels of US crude oil inventories, as reported by the EIA. Energy companies are ignoring yet another unexpected buildup in petrol stockpiles of 4.913 million barrels of refined petrol vs the projected buildup of 2 million barrels, adding even more to the 3.083 million barrels from the previous week, despite the decline in crude oil supplies.

The Trans Mountain pipeline expansion project in Canada is almost finished, and backfilling is scheduled to start in February. According to industry executives, the pipeline is anticipated to quadruple Canada’s flow of crude oil to international markets by the end of the summer. At the moment, Canada is the world’s fourth-largest producer of crude oil.

From a technical perspective, WTI Crude Oil rose over $75.50 and reached an intraday high of $75.80 before reversing course and continuing to test slightly above the $75.00 handle. WTI is trading at $75.35 per barrel at the time of writing. The 200-hour Simple Moving Average (SMA) around $73.50 continues to provide technical support for US Crude Oil, and short-term technical indicators are also optimistic.