Crude Oil News Today: US Refinery Rates Boosting Market Optimism

U.S. Inventories Impact

Oil prices are rebounding on Thursday, driven by reactions to U.S. crude oil and gasoline inventory data. Despite an increase in stockpiles, with a surge in crude imports and sluggish gasoline demand, prices have shown resilience. A smaller than anticipated inventory build, as reported by the Energy Information Administration (EIA) compared to the American Petroleum Institute’s (API) projections, suggests a slight global oil market deficit, supporting Brent crude prices. Additionally, U.S. refinery utilization rates have seen an uptick.

At 09:33 GMT, Light Crude Oil Futures are trading $81.64, up $0.29 or +0.36%.

Dollar Strength and Stockpile Surges

The strengthening U.S. dollar has impacted oil prices, making dollar-denominated oil more expensive for other currency holders. This effect, combined with unexpected increases in U.S. crude and gasoline stockpiles, has pressured prices. The rise in inventories, contrary to analysts’ expectations for a decline, and the drop in gasoline demand to 8.7 million barrels per day indicate potential oversupply concerns.

Central Bank Policies

Central bank decisions, particularly from the U.S. Federal Reserve, are critical in shaping oil market sentiments. With inflation data suggesting a pause in interest rate hikes, the market anticipates rate cuts by both the Fed and the European Central Bank starting in June. Such policy shifts typically bolster oil demand by making borrowing cheaper.

OPEC+ Decisions

Attention is focused on the upcoming OPEC+ meeting. While significant policy changes are not expected until the June ministerial gathering, adherence to current production quotas is pivotal. OPEC’s recent overproduction, alongside Russia and Iraq’s challenges in meeting output cuts, raises questions about the group’s ability to maintain agreed reductions.

Geopolitical Tensions

Persistent geopolitical risks, especially the ongoing tensions in the Middle East, are contributing to market volatility. The lack of a ceasefire between Israel and Hamas keeps regional tensions high, influencing global oil supply concerns.

Market Forecast

In light of these developments, the short-term market forecast leans towards a bullish outlook. Factors such as OPEC+ policy adherence, geopolitical risks, and central bank policies are likely to outweigh the bearish pressures from U.S. inventory builds and the strong dollar, supporting an upward price trend.

Technical Analysis

Light crude oil futures continue to consolidate on Thursday, but with a slight upside bias as short-term support at $80.30 holds. The key to sustaining the rally will be the market’s ability to overcome the mid-March high at $83.12. This is the potentential trigger point for an acceleration to the upside. A move of this magnitude will put $85.00 back on the radar.

In the meantime, don’t ignore the risks of a breakdown under $80.30. The daily chart don’t show any clean support under this level until the moving average cluster at $77.35 and $77.23.