Oil Soars to 2023 Highs: Sets New Support Levels? 

  • WTI crude futures reached a 2023 high, briefly exceeding $94 per barrel, driven by a significant 2.17 million barrel drop in US crude inventories.
  • Concerns about tightening supplies as winter approaches, coupled with OPEC+ extending supply cuts, raise questions about the potential for oil to dip below $88 and how recent price peaks and troughs will fare against corrective pressure.

WTI crude futures surged by 3.5% on Wednesday, briefly reaching above $94, marking their highest settlement price of 2023. This impressive rally followed the release of EIA data indicating a larger-than-expected decrease in US crude inventories, showing a 2.17 million barrel drop in the past week. 

In parallel, Brent crude futures saw a substantial increase of 2.8%, reaching $96.55 and even breaching the $97 threshold during the trading session. 

Market sentiment is increasingly concerned about tightening supplies as we approach the northern hemisphere winter. Earlier in the month, major OPEC+ players, Saudi Arabia and Russia, extended supply cuts of 1.3 million barrels through the end of the year. 

The question that looms is whether oil can fall below the recent lows of $88.00 per barrel without a decision to raise production? And if we don’t see the impetus for USOIL on the chart to keep going higher, how well do we think the recent higher highs ($92.65) and lower highs ($91.30) will fare against some potential corrective downside pressure?

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