Oil began to climb from an overnight dive in Asian trade Wednesday as data showing stronger US energy demand outweighed assurances of a supply boost by Saudi Arabia, analysts said.
New York's main contract, light sweet crude for delivery in May, rose 54 cents to $106.61 and Brent North Sea crude for May delivery advanced 28 cents to 124.40. At this writing crude is at 106.62 and continuing to climb
The impact of a boost in output by Saudi Arabia - the world's largest crude exporter - took a backseat to forecasts issued by the American Petroleum Institute showing a fall in US crude inventories, analysts said.
The market is primarily reacting to the unofficial report issued by the American Petroleum Institute. This report indicate that crude inventories came down by 1.4 million barrels last week, and so that piece of news is causing oil to rebound after the sharp drop
The US is the world's largest oil consumer, and a dip in its stockpiles indicates an increase in energy demand, which would shore up prices.
Saudi Arabia's statement that it was ready to help stabilize the market by making up for a supply shortfall to compensate for lost Iranian output due to Western sanctions on Tehran had pushed oil prices lower.
The assurances to boost output come as the international community ramps up sanctions on Iran - the world's fourth-largest oil producer - in an effort to halt its nuclear activities, which Iran insists are for peaceful purposes only.
Regardless of how the markets view the geopolitical situation, facts are facts and should have a direct action upon price. Demand is steadily dropping and supplies steadily increasing. The western world gets very little oil from Iran and Iran is continuing to supply their other customers, so there is not a shortage of oil. OPEC has assured the western world that it will increase production and Libyan production is increasing faster then expected.
With China's announced slowdown demand should be outweighing supplies and price should be falling.
Crude Oil Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3