WTI rallies to $94.00 neighbourhood, highest since August 2022 on signs of tight supply
- WTI Crude Oil prices scale higher for the third straight day and rise to over a one-year high.
- The EIA report released on Wednesday pointed to signs of tighter supply and lend support.
- Hopes for an economic recovery in China remain supportive of the ongoing positive move.
West Texas Intermediary (WTI) Crude Oil prices build on this week's goodish rebound from the vicinity of mid-$88.00s and scale higher for the third successive day on Wednesday. The momentum lifts the commodity closer to the $94.00/barrel mark, or the highest level since late August 2022 during the Asian session and remains well supported by continued signs of tighter global supply.
According to the data published by the US Energy Information Administration (EIA) on Wednesday, US crude oil inventories for the week ended September 22 decreased more-than-expected, by 2.169 million barrels from the previous week. This marks the second straight week of a drawdown and comes on top of deep supply cuts from the world's two largest Oil producers – Russia and Saudi Arabia. This, in turn, adds to bets that global supplies will tighten further this year and continues to act as a tailwind for Crude Oil prices.
Apart from this, some optimism over an economic recovery in China acts as a tailwind for the black liquid and contributes to the ongoing positive momentum. Furthermore, fuel demand in China – the world’s largest Oil importer – is also expected to pick up during the week-long Autumn festival holiday, starting on Friday. This, in turn, suggests that the path of least resistance for Oil prices is to the upside and supports prospects for a further appreciating move, though overbought conditions on the daily chart might cap gains.
Traders might also prefer to wait on the sidelines ahead of the release of the official Chinese PMI prints, due on Sunday. The data will provide fresh insights into the economic activity in the world's second-largest economy and provide some impetus to Oil prices. In the meantime, the aforementioned supporting factors, which, to a larger extent, have outweighed worries about economic headwinds stemming from rapidly rising borrowing costs, should help limit any meaningful corrective decline in Crude Oil prices.
Technical levels to watch