Oil leapt higher by around 2 percent overnight as the official crude inventory numbers delivered the goods with a larger than expected drawdown. The Energy Information Administration (EIA) data saw crude inventories fall by 4.7 million barrels against an expected fall of 3.2 million barrels. Pleasingly for bulls, distillate and gasoline inventories also fell by more than expected.
Brent spot raced to a high of 49.70 before settling at 49.50 in early Asia. WTI spot managed to climb to 47.25 before settling at 47.00 in early Asia.
Despite the new found euphoria in the crude market, both contracts now face some significant technical resistance ahead which may give traders some pause for thought after crudes impressive one week rally.
Brent spot has now formed a double top at 49.70 and has the psychological 50.00 lying in wait just behind that. Should that break then Brent will also have to overcome the 100-day moving average at 50.65.
WTI spot will have resistance at the overnight high of 47.25, but far more formidable resistance at 47.95, the 100-day moving average.
In summary the price action is undeniably constructive for both contracts, but both now have some wood to chop technically on the upside.