Crude Oil News Today: Prices Surge Amid Global Tensions and Supply Crunch

Supply Tightens Amid Geopolitical Tensions

Oil prices are rising on Monday, continuing last week’s upward trend due to tightening supply and increased risks from ongoing attacks on Russian energy infrastructure. The 200-day moving average suggests strong technical momentum, with little resistance seen before $82.68. Despite the influence of a robust U.S. Dollar, traders await the Federal Reserve’s upcoming decision on interest rates.

At 09:47 GMT, Light Crude Oil futures are trading $81.42, up $0.84 or +1.04%.

The recent attacks on Russian refineries have led to a $2-$3 per barrel risk premium, influencing oil prices. Key developments, such as further attacks over the weekend and fires at major Russian refineries, have notably reduced Russian refining capacity. Meanwhile, geopolitical tensions escalate in the Middle East, with Israeli plans to expand into Gaza’s Rafah enclave.

Investors are closely watching the U.S. Federal Reserve’s meeting for insights into future interest rate adjustments, which could influence U.S. demand – a critical factor given its status as the world’s largest oil consumer. Last week, both benchmark oil contracts posted gains, supported by bullish demand reports and a revised supply outlook by the International Energy Agency (IEA), indicating a possible supply deficit.

Last Week’s Events

Oil prices surged last week, with light crude futures reaching over $81 per barrel. This rise is attributed to strong U.S. refiner demand and tightening global supplies. The IEA revised its demand forecast upwards, highlighting a potential supply deficit.

Geopolitical factors, especially strikes on Russian oil refineries and continued output cuts by OPEC+, are heightening supply concerns. Despite economic slowing signs in the U.S., the domestic oil market remains resilient, indicated by decreasing crude and gasoline stockpiles.

The Federal Reserve’s policy remains a critical factor for oil traders, with potential rate cuts poised to impact U.S. oil demand. Despite a strengthening U.S. dollar, the bullish sentiment in the oil market persists. U.S. production is also on the rise, indicated by an increase in rig counts.

Short-Term Forecast

The outlook for the coming week is bullish. Factors like global demand increases, geopolitical supply disruptions, and strategic supply adjustments are expected to support this trend. Resilient demand, robust refining margins, and high crack spreads suggest that oil prices may continue to climb. Traders should prepare for sustained price growth, driven by ongoing demand and supply constraints.

Technical Analysis

The trend is up on the daily chart with no visible resistance until $82.68 to $83.28. The latter is another potential trigger point for an acceleration to the upside with $88.21 to $89.49 the next target zone.

On the downside, the market remains comfortably above the 200-day moving average at $76.69, which is providing long-term support.