Crude Oil News Today: Steady Amidst Optimism, Lingering Supply Concerns

Yellen Remarks Fuel Rebound

Oil prices showed resilience early Friday, remaining nearly unchanged but poised to conclude the week with gains following two consecutive weeks of losses. A surge of optimism enveloped the market after a prominent U.S. official expressed confidence in economic growth, while lingering supply worries stemming from Middle East tensions kept investors on edge. Brent crude has advanced 2.4% this week, with WTI following suit, up by 0.9%.

At 09:32 GMT, Light Crude Oil Futures are trading $83.72, up $0.15 or +0.18%.

Treasury Secretary Janet Yellen’s statements to Reuters on Thursday provided a significant boost. Yellen hinted at a possible upward revision of U.S. GDP growth for the first quarter, suggesting that inflationary pressures may ease after several anomalous factors held back economic performance. Her comments came amidst concerns over sluggish first-quarter growth and apprehensions regarding the Federal Reserve’s stance on interest rates, which had initially weighed on oil prices.

Demand Worries and Supply Factors

Despite this positive outlook, concerns regarding fuel demand lingered as U.S. gasoline stockpiles showed a lesser decline than anticipated, coupled with an unexpected rise in distillate inventories, according to Energy Information Administration (EIA) data. However, a sharp drop in U.S. crude inventories provided a silver lining, driven by a surge in exports, underscoring underlying demand strength.

Amidst these developments, geopolitical tensions in the Middle East continued to influence market sentiment. Escalating conflicts, particularly in the Gaza region, raised concerns about potential disruptions to oil supply. Although oil production remained unaffected, traders remained vigilant, wary of the potential implications of continued unrest in the region.

PCE Report and Market Outlook

Market focus shifted towards the upcoming release of the personal consumption expenditures (PCE) price index, a key inflation gauge favored by the Federal Reserve. Analysts anticipate an uptick in both headline and core PCE figures, reflecting heightened inflationary pressures. This data assumes significance ahead of the Fed’s policy meeting next week, where interest rate decisions will be closely watched.

Uncertainty looms over the Fed’s future policy direction, with diverging views on the timing and magnitude of potential rate adjustments. Crude oil demand could be particularly sensitive to higher-than-expected inflation data, as prolonged rate hikes may weigh on economic growth.

In summary, oil markets remain resilient amidst a backdrop of optimism fueled by positive economic indicators and ongoing supply concerns. However, lingering uncertainties regarding inflation and monetary policy decisions underscore the need for caution among traders as they navigate through volatile market conditions.

Technical Analysis

The short-term trend is down, but the market is still getting support from the uptrending intermediate and long-term moving averages.

The short-term range is $87.13 to $80.70. Its 50% level at $83.92 is controlling the near-term direction of the market.

On the downside, the nearest support is the 50-day moving average at $80.85. Buyers are likely to come in on the first test of this indicator, however, if it fails look for the selling to possibly extend into the 200-day moving average at $78.35.