After a report indicated that U.S. crude stockpiles fell for the first time in three weeks oil prices went up to $90 a barrel for the first time in two years.
Futures rose 1.2 percent to a high of $90.46 and inventories declined 0.4 percent down 1.5 million barrels.
Oil's 14 day relative strength index was 67.7 which is close to 70 that traders typically believe is a signal that the prices will reverse.
“In the U.S. itself the excess in inventories has come off very, very quickly,” said Amrita Sen, an analyst at Barclays Plc in London.
“Over the last five or six weeks, you’ve eroded about 40 million barrels of inventories. It’s tightening, and it should continue to erode as we progress into the new year.”
The reason for the climb is that the U.S. may extend economic stimulus and the forecast of cold weather ahead.
“The expectations are that we’ll see some inventory drawdowns tomorrow,” said Andrey Kryuchenkov, an analyst with VTB Capital in London.
“A weaker dollar is helping support crude, though macro sentiment is mixed. The market is overbought, and any escalation in concern about risk could trigger profit-taking.”
Tags: Futures, Oil, crude, U.S.
