Huge draw down in inventories sends oil sharply higher.
The DOE Crude oil inventory data shocked the markets today, sending the price of crude oil sharply higher. Crude oil inventories were down -14513K barrels which was largely influenced by the hurricane in the Gulf (see Adams post). It nevertheless shuttered the oil market and prices are closing up $2.12 to $47.62 per barrel or 4.66%.
Looking at the hourly chart below, the price is currently trading back above the 100 hour MA at $47.24. topside trend line cuts across at $48.41 today (moving lower). That level will be need to be broken to keep the bullish momentum going. The price did move above the 50% of the move down from the June high. That level comes in at $46.48 and is now support/risk for longs/buyers.
The draw down is probably a transitory effect as a result of the storm, but the traders today reacted to the headlines. Going forward, there will need to be more upside momentum above the trend line to keep the trend going.
