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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Crude Oil Surges on Inventory Decline Strong US Demand

Article By: ,  Financial Analyst
June 17, 2015 4:01 PM

US Crude Oil (daily chart shown below), representing the West Texas Intermediate benchmark, surged by close to 2% on Wednesday morning to rise above $61.00.

Data from the American Petroleum Institute on Tuesday confirmed a greater-than-expected 2.9 billion barrel decline in US oil inventories for last week. Additional data on US oil stockpiles is expected later Wednesday from the US Energy Information Administration, which is widely anticipated to report a seventh consecutive week of crude inventory declines.

Contributing to this declining supply and strong demand in the US is the expected decrease in US crude oil production due to the higher cost of producing shale.

 

These conditions have supported oil prices for the past several weeks, as US crude has traded in a relatively tight range since early May with major downside support around the $56.50 price level. Upside resistance on this trading range is around the $62.50 level. On any breakout above this trading range resistance, a major upside target resides at the key $65.00 resistance level.

Despite the current rise within this trading range, the price of US crude oil is still entrenched within a one-year downtrend that extends back to the intermediate high of 107.65 in June of 2014. This downtrend saw a drop of more than 60% down to the six-year low around 42.00 in March, before rebounding and making a partial recovery into the current trading range.

With any bearish price move that breaks below this trading range, which would preserve the longstanding downtrend for crude oil, the next major support targets to the downside reside around the $55.00 and then $50.00 objectives.

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