Oil News: Crude Holds Steady After Five-Day Rally, Dollar Strength Caps Gains

Light Crude Oil Prices Steady After Five-Day Rally

Light crude oil prices held steady on Monday as traders paused after a five-session rally that began on December 27. Despite initial momentum, the market showed limited follow-through, hovering near three-month highs. Price action suggests traders are attempting to extend the upward push, driven by key technical levels and seasonal demand factors.

The recent price surge gained traction once crude crossed the 50-day moving average at $69.42, and further accelerated past the 200-day moving average at $72.36, which now serves as critical support. With the daily chart indicating room for further gains, $77.36 is the next upside target for traders watching technical indicators closely.

At 10:58 GMT, Light Crude Oil futures are trading $74.01, up $0.05 or +0.07%.

Oil Holds Despite Dollar Strength

Oil prices opened Monday under pressure from a robust U.S. dollar but maintained their highest levels since mid-October. The dollar’s strength, which hovered near a two-year high, typically exerts downward pressure on commodities priced in dollars by making them more expensive for holders of other currencies. However, colder weather across the U.S. and Europe provided enough support to offset this headwind, keeping oil prices elevated.

West Texas Intermediate (WTI) crude, the U.S. benchmark, remained near levels last seen on October 11. Brent crude found additional support from a rally in natural gas prices, tighter refining margins, and sustained cold weather across northwest Europe and North America. Analysts suggest that these factors could keep prices buoyant in the near term.

Demand Optimism and Supply Tightening in Focus

Rising demand expectations fueled by colder Northern Hemisphere weather and renewed hopes for economic stimulus in China contributed to the price rally. Traders anticipate that fiscal support measures could revitalize the world’s second-largest oil consumer, boosting global energy demand.

Saudi Aramco’s decision to raise crude prices for Asian buyers in February also signals stronger demand expectations. This marks the first price increase in three months, underscoring Saudi Arabia’s confidence in market strength heading into the first quarter.

Sanctions Threaten Supply Outlook

On the supply front, the prospect of tighter Western sanctions on Iranian and Russian oil exports looms large. The Biden administration plans to intensify pressure on Russia’s oil revenues by targeting tankers transporting Russian crude. Simultaneously, Goldman Sachs projects a reduction in Iranian oil output, forecasting a 300,000 barrel-per-day (bpd) decline by Q2 2025, potentially bringing production down to 3.25 million bpd.

These developments reflect tightening global supply conditions, which could add further bullish momentum to prices if geopolitical tensions escalate.

Market Forecast: Bullish Outlook with Dollar Strength as Potential Headwind

Crude oil prices are positioned for further gains, with technical indicators signaling continued strength and fundamental support from colder weather and tightening supply risks. The market’s ability to sustain levels above the 200-day moving average reinforces a bullish sentiment. However, the strong U.S. dollar remains a notable headwind, potentially limiting upside momentum by making oil more expensive for international buyers.

Traders will closely monitor economic data releases and the Federal Reserve’s policy stance later this week, as any hawkish signals could further strengthen the dollar and weigh on crude prices. While the overall outlook leans bullish, the interplay between supply concerns and currency pressure will shape short-term price action.

More Information in our Economic Calendar.