Oil prices edged higher on Thursday led by an unexpected draw in U.S. gasoline inventories, despite swollen crude supplies that added an optimism in the fuel markets to remain under pressure.
The international benchmark for oil prices Brent crude futures changed hands at $55.41 per barrel, up 29 cents, or 0.5 percent at the close.
U.S. West Texas Intermediate (WTI) crude rose 26 cents, or 0.5 percent and stood at $52.60 per barrel.
According to the U.S. Energy Information Administration (EIA), gasoline stocks declined by about 869,000 barrels to settle at 256.2 million barrels last week, compared to analysts' expectations of a 1.1 million barrel gain.
Investors said that crude had found support in the unexpected rally in U.S. gasoline inventories, despite most of the fuel markets remained bloated, suggesting the likelihood of a further price increase.
"We remain highly skeptical of the overnight price action," said senior market analyst Jeffrey Halley.
Meanwhile, the U.S. commercial crude inventories soared by about 18.8 million barrels to 508.6million barrels, according to the EIA.
Ahead of the continued rising of U.S. crude production and higher fuel inventories, U.S. bank Goldman Sachs cited that it could be a sign for a persistent over-supplied for oil markets.
"The 4Q16 global oil market surplus led to further rises in global inventories in January, and as a result the draws that we expect will start from a high base," the bank said.
"U.S. production has also rebounded faster than our rig modeling suggested ... and we view the faster shale rebound as creating downside risk to our 2018 WTI price forecast of $55 per barrel, but not to our expectation that the global oil market will shift into deficit in 1H17," it added.
Crude Oil: Critical
Crude palm oil prices declined 0.15 percent to settle at Rs 581.30 per 10 kg in futures trade today, fueled by investors’ booked profits at higher levels in the wake of a deteriorating demand in the spot market.
Elsewhere in the Multi Commodity Exchange, crude palm oil February delivery remained steady at 0.90 paise, or 0.15 percent to settle at Rs 581.30 per 10 kg in a business turnover of 38 lots.
The chart below illustrates the price movement of crude oil prices ahead of the unexpected draw in U.S. gasoline inventories, despite swollen crude supplies.
Oil is showing signs of recovery after the price traded in a heavy trading volume and tested resistance 51.97, followed by another test at resistance 52.59. Additionally, the RSI stood at 51.1123, suggesting the price could still continue higher.
As crude oil prices traded in recovering path, there is still no confirmation if the price will rally. At present, the price is testing resistance 52.59 which could signal a bullish tone if it will break through.
Strong resistance stood at 54.32. Yet, a correction in the near-term towards 49.61 level is expected if support at 50.71 is broken. To confirm buying pressure, the black commodity needs to rally further.
Get market insights and updates and subscribe to our daily newsletter! FSM News provides accurate market knowledge and information.