Oil News: Crude Prices Hold Near Multi-Month Highs, Bullish Momentum Tested

Light Crude Oil Prices Hold Steady After Multi-Month Highs

Light crude oil futures are trading flat Thursday, stabilizing within the wide range established in the previous session. This indecision among traders follows a sharp rally that saw prices testing $79.44, the highest level since April 12. Key technical levels are now in focus, with $80.00 and $81.82 serving as potential upside targets, while a drop below $78.28 could signal weakness.

At 10:44 GMT, Light Crude Oil futures are trading $78.47, down $0.24 or -0.30%.

Will U.S. Crude Draw and Russian Sanctions Keep Prices Elevated?

Crude prices steadied after surging Wednesday due to two major bullish factors: a larger-than-expected U.S. crude stock draw and expanded sanctions on Russian oil. According to the Energy Information Administration (EIA), U.S. crude inventories dropped by 2 million barrels last week, more than double the anticipated 992,000-barrel decline. Exports rose while imports fell, pushing stockpiles to their lowest levels since April 2022.

The situation is compounded by the Biden administration imposing sweeping sanctions on Russian oil producers and tankers. These measures have disrupted Moscow’s supply chain, forcing its customers to seek alternatives while driving shipping costs higher.

Will OPEC+ Maintain Its Cautious Stance on Supply?

OPEC+ remains cautious about increasing output, despite the recent price rally. Analysts, including Commodity Context’s Rory Johnston, note that the producer group has been wary of prematurely easing supply cuts after being repeatedly disappointed by market conditions over the past year. This conservative approach suggests that the cartel will likely hold back on significant production increases in the near term.

Geopolitical and Demand Signals Temper Market Optimism

Limiting additional gains, Israel and Hamas agreed to a ceasefire deal, easing concerns over geopolitical risk in the Middle East. On the demand side, global oil consumption grew by 1.2 million barrels per day (bpd) in early January 2025 compared to a year ago, slightly below expectations. JPMorgan analysts anticipate stronger demand in the weeks ahead, driven by India’s festival season and Lunar New Year travel in China.

Additionally, easing U.S. inflation has sparked speculation of potential Federal Reserve interest rate cuts this year, which could boost economic activity and energy consumption.

Market Forecast: Bullish Momentum Faces Resistance

The current technical setup points to a bullish outlook for crude oil, with a break above $79.44 signaling further upside potential toward $80.00 and $81.82. However, a failure to maintain momentum above $78.28 could lead to selling pressure, targeting $76.03 as the next support. Traders should watch for additional supply-side developments and U.S. economic indicators to gauge the sustainability of the recent rally.

More Information in our Economic Calendar.