Oil News: Is Crude Set to Break Through $80 This Week?

What Supported Oil Prices Last Week?

Crude oil prices closed last week with strong gains, driven by tightening supply and robust seasonal demand. U.S. sanctions on Russian oil producers and tankers significantly disrupted global shipping routes, reducing available supply and lifting market sentiment. At the same time, colder-than-expected weather in the U.S. and Europe increased demand for heating oil, adding to the bullish tone.

Mixed demand signals from key economies such as China tempered the rally slightly, keeping traders focused on upcoming data for clearer direction.

Technically, the trend is up with the market going on a tear since crossing to the strong side of a pair of retracement levels at $70.80 – $69.55. The next obstacle is the April high at $80.00, which is the gateway to another multi-month high at $85.78.

Last week, Light Crude Oil futures settled at $77.39, up $2.15 or +2.86%.

How Are Supply Factors Supporting Prices?

Supply constraints remain a major driver of the market. Recent U.S. sanctions targeted over 180 vessels involved in transporting Russian crude, causing disruptions that increased freight costs and limited supply. Analysts estimate these measures could remove hundreds of thousands of barrels per day from global availability, further tightening the market.

The Energy Information Administration (EIA) reported a 2-million-barrel draw in U.S. crude inventories, exceeding expectations and reinforcing concerns about constrained supply. OPEC+ continues to maintain cautious production levels, opting not to raise output despite higher prices. This strategy underpins the current bullish sentiment, as traders weigh the impact of restricted supply on future price movements.

Is Demand Recovery Strong Enough?

Seasonal demand has remained supportive, with colder weather in key regions boosting heating oil consumption. In the U.S., easing inflation fueled optimism for potential interest rate cuts, which could spur economic growth and energy demand.

However, demand signals from China were less encouraging. The world’s largest oil importer reported a decline in refining activity, its first year-over-year drop since 2022. While holiday travel and seasonal consumption in Asia provided some support, the broader outlook for demand remains uncertain, particularly as economic growth concerns persist.

What Role Did Geopolitical Developments Play?

Geopolitical events added another layer of complexity to the market. A ceasefire in the Middle East eased disruptions in Red Sea shipping lanes, temporarily relieving supply concerns. However, the possibility of stricter sanctions on Iran and Venezuela continues to loom, keeping traders alert to potential disruptions in global supply chains.

Market Forecast: Bullish Momentum Builds

The crude oil market remains bullish, with strong support from supply constraints and seasonal demand. Sanctions on Russian oil, combined with OPEC+ production discipline, have created a solid foundation for prices. While demand uncertainties, particularly from China, could limit further advances, the overall outlook favors higher prices in the near term. Traders should monitor inventory reports and macroeconomic indicators to stay ahead of market developments.

More Information in our Economic Calendar.