Bullish Chart Pattern Points to Higher Targets
The daily chart shows that now that the top at $62.20 has been cleared, buyers have a clean shot at previous tops at $64.75 and $66.49.
Winter Storm and Dollar Weakness Drive Prices Higher
Chart analysis also reveals that the market is now trading at its highest levels since late September in reaction to a severe winter storm that disrupted U.S. crude output, Reuters said. Meanwhile, the current plunge in the U.S. Dollar is also driving up demand for the dollar-denominated asset. Reuters is also saying that continued outages in Kazakhstan are underpinning prices.
Gulf Coast Exports Drop to Zero Before Rebounding
Ship-tracking service Vortexa reported that exports of crude oil from U.S. Gulf Coast ports dropped to zero on Sunday before rebounding on Monday. This news that impacted the supply side of the market was due to a massive winter storm that swept across the U.S. from Texas to Maine.
Fed Decision Could Further Pressure the Dollar
Later today, the Fed will announce its latest rate and policy decisions that could have an impact on the U.S. Dollar. Although the central bank is expected to leave rates unchanged today, the market is currently pricing in at least two cuts, which should keep the pressure on the dollar and subsequently underpin crude oil.
Geopolitical Risks Add Support to Oil Prices
Geopolitical risks are also providing support for crude oil. First, buyers are reacting to lost production in Kazakhstan as it grapples with a slow restart of output at the Tengiz field. Second, a U.S. armada of warships has arrived off the coast of Iran, increasing the risk of supply disruptions from OPEC’s fourth-biggest crude producer. President Trump gave Iran a chance to negotiate a deal on nuclear weapons or risk another attack that could be worse than the previous attack.
EIA Inventory Report Awaited for Further Direction
Finally, on the demand side, the U.S. Energy Information Administration (EIA) will release its latest results with crude and gasoline supply expected to increase and distillate inventories to have fallen.
