Crude Oil News Today: Prices Climb on US Stock Draws, Rising Chinese Imports

James Hyerczyk
Published: May 9, 2024, 10:37 GMT+00:00

Key Points:

  • US crude inventories fall more than expected.
  • Chinese imports mark significant increase year-over-year.
  • Bullish short-term forecast despite global tensions.
Crude Oil News Today

In this article:

Early Strength Driven by EIA Numbers, China Imports

Oil prices are trading higher on Thursday, buoyed by a significant drawdown in U.S. crude inventories and a notable increase in Chinese imports, signaling robust demand from the world’s two largest oil consumers.

At 10:18 GMT, Light Crude Oil Futures are trading $79.55, up $0.56 or +0.71%.

The latest Energy Information Administration (EIA) data revealed a larger-than-expected decrease in U.S. crude stocks, with inventories dropping by 1.4 million barrels last week, surpassing analysts’ forecasts of a 1.1 million-barrel decline. This reduction is primarily attributed to an increase in refinery throughput, which saw a rise of 307,000 barrels per day (bpd), highlighting a ramp-up in refining activity as the driving season approaches.

China’s Import Factor

Concurrently, China’s crude oil imports in April surged to 44.72 million metric tons, approximately 10.88 million bpd, marking a 5.45% increase from the previous year. This growth comes on the heels of China’s broader economic recovery efforts, which include enhancing domestic and overseas demand through strategic policy interventions aimed at stabilizing the economy amidst ongoing challenges.

Economic Indicators and Market Sentiments

The rise in oil prices is also supported by broader economic data from China showing a return to growth in exports and imports, which contrasts with a contraction in the previous month. This positive trade balance, coupled with proactive fiscal and monetary policies from Beijing, suggests a potential stabilization of market confidence and investor sentiment, albeit the long-term sustainability of this recovery remains under scrutiny by analysts.

Short-Term Forecast

Looking ahead, the oil market appears cautiously optimistic. While the draw in U.S. inventories and the uptick in Chinese imports provide a bullish signal, ongoing global economic uncertainties and geopolitical tensions could temper market gains. The immediate market outlook is bullish, with expectations that if the current demand trends persist, oil prices could maintain their upward trend in the near term.

In summary, while the market benefits from positive signals in both U.S. and Chinese oil demand, traders should remain vigilant of the broader economic and geopolitical environments that could influence future oil price movements.

Technical Analysis

Daily Light Crude Oil Futures

Light crude oil futures are higher on Thursday after taking out a series of highs. The price action has created a minor bottom at $76.89, but more importantly, it has put the market on the strong side of the 200-day moving average at $78.64 once again. This indicator controls the long-term direction.

Should the upside momentum continue to grow with the 200-day MA as support, traders could take a shot at the 50-day moving average at $81.33. This indicator controls the intermediate trend.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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