Crude Oil News Today: Underpinned by Demand Expectations, Global Tensions

Crude Oil Futures Rise

Crude oil futures are poised to conclude the week on a strong note. The international benchmark Brent crude is currently trading above $84 a barrel, while the U.S. benchmark West Texas Intermediate (WTI) is nearing $80. This uptick in prices has been influenced by a combination of growing demand from the world’s top crude consumers—the U.S. and China—and ongoing geopolitical conflicts in the Middle East.

At 10:40 GMT, Light Crude Oil Futures are trading $79.80, up $0.54 or +0.68%.

Demand Trends

In the U.S., a noticeable drop in crude inventories has been reported, which aligns with increased refinery activity. This reduction in stockpiles, documented in the latest Energy Information Administration (EIA) report, indicates a -1.36 million barrel decrease. Despite these bullish signs, the report also noted a rise in gasoline supplies by +915,000 barrels and distillate stockpiles by +560,000 barrels, introducing a mixed sentiment in the market dynamics.

Concurrently, China has demonstrated robust import activity, with figures surpassing those of the previous year, signaling strengthened trade flows and potentially rising demand. This resurgence in import activity could be attributed to Beijing’s recent policy measures aimed at revitalizing economic stability and confidence among investors and consumers.

Geopolitical Factors

Recent developments in global geopolitics also play a crucial role in oil pricing. In Europe, an oil refinery in Russia’s Kaluga region was reportedly attacked by a Ukrainian drone, escalating regional tensions. In the Middle East, ongoing conflicts, including Israeli military activities in Gaza, continue to heighten concerns about supply disruptions from key oil-producing regions.

Market Outlook

Given the current scenario, the market exhibits a bullish outlook for the near term, supported by strong demand signals and geopolitical uncertainties. However, projections by financial institutions like Citibank suggest a potential moderation in oil prices later in the year, with Brent forecasted to average $86 a barrel in Q2 2024 before declining to $74 in Q3.

This anticipated moderation is based on signs that global oil demand growth may be slowing. Traders should monitor these developments closely, as the interplay of demand recovery and geopolitical risks will be critical in shaping market trends in the coming months.

Technical Analysis

Light crude oil futures are higher on Friday as traders continue to claw back recent loses. Although the market has recaptured the 200-day moving average and long-term trend indicator at $78.66, it still faces opposition at the 60-day moving average and intermediate-term trend indicator at $81.37.

Bullish traders are treading carefully as they try to establish a new higher bottom so don’t expect too much volatility until the market crosses to the strong side of the 50-day moving average.