Oil News: U.S. Fuel Demand Lifts Crude Prices—Key Resistance Levels Ahead

Crude Oil Prices Edge Higher on Demand Optimism and Dollar Weakness

Light crude oil futures are gaining traction Thursday, supported by strong U.S. demand indicators and a weakening dollar. A successful test of a key pivot level at $66.75 suggests potential for a higher bottom formation, indicating fresh buying interest. However, the market remains rangebound, with key resistance at $68.97 and additional barriers at the 200-day and 50-day moving averages of $70.09 and $71.07, respectively.

At 08:52 GMT, Light Crude Oil Futures are trading $67.47, up $0.56 or +0.84%.

U.S. Fuel Demand and Dollar Weakness Provide Support

Oil prices are seeing upside momentum as U.S. fuel inventories declined more than expected, reinforcing a positive demand outlook. Government data revealed a substantial 2.8 million barrel draw in distillate stocks—far exceeding the 300,000-barrel reduction anticipated in a Reuters poll. Despite lower air travel passenger volumes, JPMorgan analysts noted that overall oil demand remains robust.

A weaker U.S. dollar is also contributing to gains, making crude more attractive to global buyers. The dollar has been in a downtrend since late February, and traders are pricing in the possibility of a Federal Reserve rate cut by year-end, which could further support oil prices.

Geopolitical Tensions and OPEC+ Production Policy in Focus

Geopolitical risks continue to influence market sentiment. Israel has resumed military operations in Gaza, raising concerns over regional stability, while U.S. airstrikes on Houthi targets in Yemen add to supply-side uncertainties. Additionally, markets are monitoring U.S.-Iran tensions, with potential implications for global crude flows.

On the supply side, OPEC+ remains a key factor. While the group has been curbing production to stabilize prices, traders are cautious about an expected output increase that could cap gains. Market participants are also watching economic data, including the upcoming U.S. S&P Global Services PMI, which could signal broader economic trends affecting demand.

China’s Oil Demand Forecasts vs. Reality

China’s oil demand remains a crucial driver for crude markets, but recent data highlights a disconnect between agency forecasts and actual import trends. OPEC estimates Chinese oil demand at 16.68 million barrels per day (bpd), up 320,000 bpd from last year. However, China’s crude imports have fallen 2.1% year-over-year to 11.04 million bpd.

This discrepancy suggests that while demand projections remain bullish, actual market conditions are less supportive. Lower crude imports indicate potential inventory buildup rather than outright consumption growth, casting doubt on the strength of China’s role in driving global oil prices higher.

Market Outlook: Cautious Upside with Resistance Ahead

Near-term crude prices are showing strength on solid U.S. demand and a weaker dollar, but gains may be tempered by OPEC+ production increases and economic uncertainty. While geopolitical tensions and supply risks provide bullish support, China’s weakening import data raises questions about long-term demand sustainability.

Traders should watch for price reactions around resistance at $68.97, with further upside potential toward $70.09. However, if the market slips below $66.75, a retest of support at $66.09 and $65.01 could indicate renewed downside pressure.

More Information in our Economic Calendar.