Crude oil is up sharply after a bearish inventory report

January 11, 2017 7:02AM CST

The EIA report was: Crude oil up 4.1 million barrels, Distillates up 8.36 million barrels, Gasoline up 5.02 million barrels.

Front month Feb WTI futures got as low as $50.71 per barrel yesterday, and is currently trading in in the $52.50 area.  One of the possible reasons for a bullish reaction to a bearish inventory report is the uptick in demand, and reports that Saudi Arabia has told some of its Asian customers that it will reduce their crude supplies in February.  Saudi Arabia has kept up the bullish rhetoric since the production cuts were announced at the last OPEC meeting.  This bullish news comes on the heels of bearish news that Iraq, the number 2 OPEC producer, plans to raise crude exports from its southern port of Basra to an all-time high of 3.641 million barrels a day in February.

Going forward $50 seems like a solid area for near term support.  If crude closes above the $54 mark, look for it to take out the recent highs in the min $55 area.  Several big banks are on record as forecasting a $50-$60 range for 2017.

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