Crude Oil News Today: OPEC Maintains Robust Demand Growth Forecast

Oil Market Gains on Global Demand and U.S. Inflation Data

Crude oil futures are experiencing an upswing on Wednesday, largely influenced by the anticipation of robust global demand and current U.S. inflation trends. Despite the persistence of inflation, there is a prevailing expectation that the Federal Reserve may commence rate cuts around June. These projections are bolstering market confidence, further supported by technical factors like the 200-day moving average which has been a consistent support point since February 9.

At 10:24 GMT, Light Crude Oil futures are trading $78.18, up $0.62 or +0.80%.

Resilient Oil Demand Amid Economic Pressures

OPEC’s latest forecasts are central to the current market optimism. The organization predicts substantial global oil demand growth in the coming years, estimating increases of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025. This outlook aligns with OPEC’s raised economic growth forecast for 2024, suggesting a potential upsurge in oil demand. This optimistic view from OPEC contrasts with the more cautious stance of the International Energy Agency (IEA), leading to notable differences in demand projections.

Geopolitical Tensions and Supply Risks

Geopolitical factors, including drone attacks on Russian refineries, have contributed to market uncertainty. Nonetheless, expectations of continued OPEC+ output cuts are expected to moderate global oil growth. In the U.S., the Energy Information Administration’s (EIA) latest report anticipates a significant increase in domestic oil production, which could pose headwinds for oil prices due to the surge in non-OPEC production.

U.S. Oil Production and Rig Count Trends

The EIA’s forecast suggests a robust growth in U.S. oil production through 2025, potentially offsetting the impacts of OPEC+ production cuts. Additionally, the American Petroleum Institute (API) reports a decrease in U.S. crude inventories, reinforcing the notion of strong demand.

Short-Term Weekly Forecast

Considering these factors, the oil market outlook remains bullish. The confluence of sustained demand growth, OPEC’s optimistic economic outlook, and expectations of Federal Reserve policy adjustments provide substantial support to oil prices. Consequently, we foresee a continued upward trend in oil prices in the short term. Traders should watch for volatility at 14:30 GMT, following the release of the Energy Information Administration (EIA) weekly inventories report.

Technical Analysis

Light crude oil futures are consolidating for a third session on Wednesday, while hovering just above 200-day moving average support at $76.94.

A sustained move over the 200-day MA will indicate the presence of buyers. Taking out the short-term top at $80.85 will confirm the uptrend with $82.68 the next potential target.

A failure to hold the 200-day MA will turn the longer-term trend down with the 50-day moving average at $75.55 the next target. This indicator represents the intermediate trend.