Crude Oil News Today: Prices Rebound on Inventory Drop and OPEC+ Cuts

Oil Prices Rebound as Inventories Shrink

Light crude oil futures edged higher on Wednesday, recovering from earlier losses after testing support at $80.83. The market showed resilience despite concerns about Chinese demand and uncertainty over Federal Reserve interest rate cuts.

At 10:17 GMT, Light Crude Oil Futures are trading $81.63, up $0.22 or +0.27%.

US Inventory Draw Supports Prices

The American Petroleum Institute (API) reported a 1.92 million barrel decrease in crude stockpiles last week, with a drawdown also observed at the Cushing, Oklahoma hub. This data suggests steady summer fuel demand, potentially driving the rebound after recent declines.

Chinese Economic Challenges Persist

Data from China, the world’s largest oil importer, revealed ongoing economic hurdles. Factory-gate prices continued to fall, indicating persistent deflationary pressures. This follows earlier signals of diminished crude appetite from some Chinese refiners.

Federal Reserve’s Cautious Stance

Federal Reserve Chair Jerome Powell stated that policymakers require more evidence of slowing inflation before reducing borrowing costs. This cautious approach to monetary policy continues to influence oil market sentiment.

Hurricane Beryl Impact Dissipates

The Texas energy industry emerged relatively unscathed from Hurricane Beryl, with most producers and facilities ramping up output. Some operations have restarted, although power restoration remains incomplete in certain areas.

Market Forecast

The short-term outlook for oil prices appears cautiously bullish. Brent crude oil prices are projected to average $89 per barrel in the second half of 2024, up from $84 in the first half. This forecast is based on persistent withdrawals from global oil inventories, estimated at 0.7 million barrels per day in the latter half of 2024.

OPEC+ production cuts, extended until at least the end of September, contribute to tightening supply. However, traders should remain vigilant of potential headwinds, including weakening Chinese demand and global economic uncertainties.

As the market awaits official US Energy Information Administration data, continued inventory drawdowns could provide further support for oil prices in the near term.

Technical Analysis

With the intermediate and long-term trends pointing up, buyers came in earlier today on the first test of Fibonacci support at $80.83. The ensuing rally could reach $82.66 before running into some resistance. Overcoming this level will be the key to resuming the uptrend.

A failure at $80.83 will signal the return of sellers. This could trigger a sharp break into the support cluster formed by a 50% level and the 50-day moving average at $79.16 and $78.87, respectively.