|Analysis||Oil inclined for the fourth day, paring some of the losses incurred over the past two weeks when the black gold dropped for nine consecutive sessions losing around 11%, as the U.S. dollar slipped boosting demand on oil as a hedge against inflation.|
Yesterday, oil gains were capped by the sharp rise of the green currency to the highest in 3 months in addition to the surge in U.S. jobless claims. The contract on Thursday inched down $0.01 closing at $72.65, while recording a high of $73.13 per barrel and a low of $71.21 per barrel.
Today, oil climbed above $73 a barrel heading for the largest weekly gain since October. This week, oil advanced 4.4% impacted by the upbeat U.S. data and decline in inventories. Industrial production and capacity utilization showed further progress suggesting that the largest crude consumer in the world is on the right track.
On the other hand, the EIA report revealed that U.S. crude oil inventories decreased by 3.7 million barrels; gasoline inventories increased by 0.9 million barrels; and distillate fuel inventories decreased by 2.9 million barrels last week.
However, stocks is not providing support for oil as it declined for the second day in the U.S. and Asia on financial concerns, while crude prices may benefit in the coming period from the cold weather in the U.S. and Europe.
Moreover, the greenback did a downside correction today as it faces a strong resistance at 77.80 which represents 23.6% Fibonacci retracement for the downside trend that started since March. The dollar's rebound is threatening the oil's rise as it reduces the appeal of all dollar-denominated commodities.
Meanwhile, oil is traded at $73.25, recording a high of $73.42 and a low of $72.60, while it faces resistance at 75.00 a barrel and a support at 72.70 a barrel.