Crude Oil News Today: Prices Jump on US Strategic Reserve Replenishment Plans

Oil Market Update

Oil prices are rebounding today, breaking a three-day losing streak. This rise is driven by expectations that the United States may start to replenish its strategic reserves, providing a potential support for prices. However, the market remains under pressure from steady interest rates and geopolitical developments.

At 09:52 GMT, Light Crude Oil Futures are trading $79.60, up $0.60 or +0.76%.

Recent Price Movements

Oil is recovering from a sharp decline where it fell more than 3% on Wednesday, hitting a seven-week low. This drop occurred after the U.S. Federal Reserve opted to keep interest rates unchanged, signaling potential limits on economic growth and oil demand for this year. Additionally, an unexpected increase in U.S. crude inventories and the prospect of a ceasefire between Israel and Hamas are influencing market dynamics.

Strategic Reserves and Market Speculations

Traders are closely monitoring the U.S. government’s signals about replenishing the Strategic Petroleum Reserve (SPR). With a target price set below $79 per barrel for buying back oil, the market is speculating that this move could provide a floor for falling prices. Hiroyuki Kikukawa, president of NS Trading, notes that the U.S. strategy to build up its reserves is currently a key factor supporting the market.

Geopolitical Tensions and Supply Concerns

In the Middle East, the anticipation of a ceasefire agreement between Israel and Hamas, facilitated by Egypt, is moderating concerns about regional supply disruptions. Despite this, Israeli Prime Minister Benjamin Netanyahu is continuing with plans for military action in Gaza, which could still trigger supply fears if the situation escalates.

Market Forecast

Looking ahead, the oil market is navigating mixed signals. While the U.S. Energy Information Administration reports rising crude inventories, signaling potential oversupply, OPEC+ is maintaining production cuts, which could offset some downward pressures. Analysts from Citi Research anticipate that OPEC+ will continue these cuts through the second half of the year. If oil prices reach a bull scenario of $90-100 per barrel, OPEC+ might relax these reductions, setting a soft ceiling on further price increases.

In conclusion, the market is exhibiting a cautious optimism, but the situation remains fluid with geopolitical and economic factors at play. The outlook is mildly bullish, contingent on continued strategic interventions and resolution of geopolitical tensions.

Technical Analysis

On Thursday, light crude oil futures are recovering from yesterday’s steep sell-off. The move was triggered by a series of sell stops under the uptrending 50-day moving average at $81.17. This is now resistance.

On the downside, helping to prop up the market is the 200-day moving average at $78.52. It is the support line controlling the longer-term direction of the market.