Oil News: Geopolitical Risks, Inventory Drop Impacting Oil Outlook

Light Crude Oil Prices Steady to Lower After Gains

Light crude oil futures prices were steady to lower on Thursday, pausing after two days of gains. This movement comes amid balancing supply risks in the Middle East and ongoing demand concerns that had recently pushed prices to their lowest levels since early 2024.

At 10:24 GMT, Light Crude Oil Futures are trading $75.00, down $0.23 or -0.31%.

Recent Performance and Market Factors

Brent crude futures and U.S. West Texas Intermediate (WTI) crude both declined overnight. Brent had increased by 2.4% on Wednesday, while WTI rose 2.8%, continuing the recovery from Monday’s sharp drop. On Monday, Brent hit its lowest since early January, and WTI its lowest since early February. Light crude oil futures faced resistance around the 200-day moving average at $75.56, a key level that could trigger further gains if surpassed.

Inventory Data and Geopolitical Tensions

A significant drop in U.S. crude inventories provided market support, with a reduction of 3.7 million barrels last week, far exceeding the expected draw of 700,000 barrels. This marked the sixth consecutive week of declines, bringing inventories to six-month lows. ANZ analysts noted this substantial draw indicates strong physical demand despite broader economic concerns.

Geopolitical tensions in the Middle East also bolstered prices. The killing of senior Hamas and Hezbollah members heightened the risk of Iranian retaliation against Israel, raising fears of supply disruptions from this crucial oil-producing region. Additionally, Libya’s National Oil Corporation declared force majeure at its Sharara oilfield, reducing output due to protests.

Economic Data and Market Monitoring

Traders are closely watching today’s U.S. initial jobless claims report for further economic insights. Economists expect 240,000 initial claims, a decrease from the previous week’s 249,000. This data follows last week’s disappointing July payrolls report, which could influence market movements.

Market Forecast: Cautiously Bullish

Given the strong physical demand and geopolitical risks, the outlook for light crude oil prices remains cautiously bullish. Resistance at the 200-day moving average could limit gains, but significant economic data or further geopolitical developments could drive prices higher in the short term. Traders should stay alert to rapidly changing market conditions.

Technical Analysis

Light crude oil futures are trading steady-to-lower just under the 200-day moving average at $75.56. Trader reaction to this level should set the tone on Thursday.

A sustained move over this level could trigger an acceleration to the upside and put the 50-day moving average at $77.73 on the radar. If sellers continue to defend the 200-day moving average then look for a potential pullback into $73.75.

The major support remains the long-term retracement zone at $74.61 to $72.19. Traders have determined that this zone represents value.