Crude Oil News Today: Extended OPEC+ Cuts Tighten Global Oil Supply

Oil Prices Fluctuate Amid Supply and Demand Factors

Light crude oil futures are experiencing a volatile start to the week, with prices initially rising on expectations of tighter supply. This upward trend was driven by factors such as OPEC+ production cuts, disruptions in Russian oil refineries due to attacks, and positive manufacturing data from China indicating potential demand increases. However, the market receded after approaching its highest level since late October.

At 09:46 GMT, Light Crude Oil Futures are trading $83.22, up $0.05 or +0.06%.

Production Cuts and Geopolitical Tensions Impact Supply

OPEC+ has extended its production cuts until the end of June, potentially tightening supply during the Northern Hemisphere’s summer. Russia, a key member of OPEC+, is focusing on reducing oil output rather than exports in line with these cuts. Additionally, Ukrainian drone attacks on Russian refineries have significantly impacted Russia’s fuel export capabilities, taking nearly 1 million barrels per day of Russian crude processing offline.

Strong Demand Signals from Europe and China

Despite expectations of a contraction, Europe’s oil demand in February rose by 100,000 barrels per day year-on-year. Moreover, China’s manufacturing sector has shown growth for the first time in six months, a positive sign for oil demand from the world’s largest crude importer. These developments suggest a robust demand outlook for the second quarter of 2024.

US Production Decline and Economic Stimuli

The United States, the world’s largest oil producer, saw a 6% drop in crude oil production in January, attributed to extreme weather conditions. In the broader economic landscape, China’s recent stimulus plans and the anticipation of U.S. Federal Reserve interest rate cuts are poised to bolster the global economy and, by extension, oil demand.

Short-Term Market Forecast

Considering the interplay of tightened supply, robust demand indicators from Europe and China, and global economic stimuli, the oil market exhibits a bullish trend for the short term. With Brent crude anticipated to average around $83 per barrel in Q4 2024, the risks to this forecast lean towards the upside. Traders should closely monitor the evolving geopolitical landscape and economic data releases for further market direction.

Technical Analysis

Light crude oil futures reaffirmed the uptrend early in the session on Monday but low-volume may have prevented a true breakout to the upside. Nonetheless, if volume should pick up again the daily chart indicates there is plenty of room to the upside with $88.21 the next target.

On the downside, a break under $82.68 will be an early sign of weakness, while a move under $80.30 will change the short-term trend to down.