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Crude closes above $ 70 for the first time since October 2018

(Bloomberg) – Oil broke a trading range of months after expectations of a reduction in supplies in the United States added to signs that the world’s largest oil-consuming country is in the midst of a solid recovery. .

West Texas Intermediate futures broke the $ 70 mark to close at their highest level since October 2018, after briefly touching the key psychological level earlier this week. Investors focused on the health of the US market ahead of inventory data to be released on Wednesday.

Confidence in the outlook for oil demand continues to rise as accelerated vaccinations allow people to travel more. Dubai’s Middle East benchmark crude is trading at its highest backwardation – a market structure indicating tight supply – in nearly a year, after the region’s physical market got off to a good start to the month.

“There are all kinds of technical models that work with closing prices,” said Bill O’Grady, executive vice president of Confluence Investment Management in St. Louis. “Every time there is a close above a number divisible by five, it tends to be quite significant” to attract flows like those of commodity trading advisers.

Crude’s advance since the 2020 crash has stalled at times this year, but prices have generally returned to an upward trajectory as global demand continues to improve. However, the outbreak of covid-19 in parts of Asia and Latin America is a reminder that the rebound will be bumpy.

“We expect a fairly considerable reduction in US crude inventories, while demand thesis continues to improve,” he said. John Kilduff, Partner at Again Capital LLC. “This atmosphere remains optimistic as we are heading for a structural deficit in terms of supply versus demand.”

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WTI for July delivery rose 82 cents to US $ 70.05 a barrel in New York and Brent for August delivery gained 73 cents to end the session at US $ 72.22 a barrel.

Original Note: Oil Closes Above $ 70 a Barrel for First Time Since Oct. 2018

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