WTI crude oil has been flirting with $80 for the past two weeks and a selloff earlier this week suggested it might not get there. But tighter US inventory numbers this week finally did the trick and oil has broken out to the highest levels since early November.
WTI crude is up $1.64 to $81.35 today in the second day of big gains. It’s the highest since OPEC extended production curbs in November. Those curbs were reaffirmed last week and will last at least through June.
Stronger global growth is also a tailwind for oil with the EIA revising its US demand forecasts slightly higher this week. That could ultimately be a doubled-edged sword if the economy stumbles but for now the market is optimistic heading into US driving season. Particularly notable was the large draw in US gasoline inventories in this week’s data. That suggests that Americas continue to drive despite better engine efficiency and a growing number of EVs on the road.
Perhaps more importantly, the market is eyeing a turn in the Chinese economy in 2024 or 2025. Copper broke out to a seven month high yesterday in a telltale sign of growth optimism.
For WTI, the close today is key. It it can finish above $80, it’s a good sign. If it holds above the March intraday high of $80.85, that’s particularly good.
The $81.37 level is also the 50% retracement of the fall since September. The 61.8% level coincides nicely with $85, which is the next target.