Crude Oil News Today: Underpinned as API Inventory Draw Exceeds Expectations

Light Crude Oil Futures Up Over 2% This Week

Light crude oil futures have surged over 2% this week, driven by several bullish factors. Geopolitical tensions in the Middle East, a significant draw in U.S. crude inventories, and optimistic forecasts for summer fuel demand have all contributed to the price surge. The oil market remains finely balanced between supply constraints and recovering demand.

At 09:40 GMT, Light Crude Oil futures are trading $82.89, up $0.08 or +0.10%.

U.S. Crude Inventory Draw: Bullish Surprise

The American Petroleum Institute (API) reported a substantial 9.163 million barrel drawdown in U.S. crude inventories for the week ending June 28, far exceeding analysts’ expectations of a 700,000-barrel decrease. This provides strong support for oil prices, though a 2.468 million barrel increase in gasoline inventories slightly tempers the bullish signal.

Middle East Tensions: Geopolitical Premium

Recent escalations involving Israel, Gaza, and Lebanon have reintroduced a geopolitical risk premium to oil prices. While no immediate impact on production has occurred, the situation warrants close monitoring.

U.S. Summer Driving Season: Rising Demand Expectations

The American Automobile Association forecasts a 5.2% increase in Independence Day holiday travel compared to 2023, with car travel up 4.8%. This expected rise in gasoline demand typically supports crude oil prices.

OPEC+ Production: Ongoing Supply Management

OPEC’s slight increase in June output, primarily from Nigeria and Iran, is offset by ongoing voluntary supply cuts from other members. OPEC+’s supply management remains a key price support.

Market Forecast: Bullish Outlook

We expect crude oil prices to maintain their upward momentum. Traders should monitor EIA inventory data, Middle East tensions, U.S. summer driving demand, OPEC+ compliance, and potential hurricane disruptions.

In summary, shrinking U.S. inventories, geopolitical risks, and anticipated strong summer demand create a supportive environment for oil prices. However, risks persist. Traders should remain vigilant to identify opportunities and manage risks. The uptrend remains strong, with $86.24 as the next key level, and $92.02 on the radar if breached.

Technical Analysis

Light crude oil futures are higher on Wednesday on relatively low volume as traders prepare for what could be a long-holiday weekend. Although it may have been disguised by the lifting of a hurricane premium, yesterday’s reversal top suggests profit-taking.

At its current price of $82.89, the market remains vulnerable to a near-term correction into $80.83 even while mid-term traders focus on the April high at $86.24.

Well-below average volume today could create pockets of volatility.