Crude Oil News Today: Robust Demand Fuels Price Surge

Strong Demand Outlook

Crude oil prices are experiencing a notable upsurge, with international-benchmark Brent crude oil and U.S.-benchmark West Texas Intermediate (WTI) crude oil futures showing significant gains.

At 10:42 GMT, Light Crude Oil futures are trading $80.40, up $0.68 or +0.85%.

This trend is driven by a strong demand outlook in the U.S., following a substantial decrease in gasoline stocks to a three-month low and an unexpected drop in crude stockpiles. Adding to this bullish sentiment are the ongoing supply concerns stemming from Ukrainian attacks on Russian refineries, signaling elevated geopolitical risks.

Supply Concerns

Supply in the oil market is currently under intense scrutiny. The latest drone strikes by Ukraine on Russian refining facilities, particularly the notable attack on Rosneft PJSC’s Ryazan plant, have exacerbated these concerns.

This series of assaults on Russia’s energy sector underpins the heightened geopolitical tensions and their potential impact on global oil supply.

Furthermore, the OPEC+ supply cuts are counterbalanced by increased production from non-OPEC countries, creating a tight yet volatile supply environment. Analysts are closely watching the International Energy Agency’s  (IEA’s) upcoming monthly report for further insights.

Resilient Demand

The demand side of the oil market is showing remarkable resilience. In the U.S., gasoline inventories have been declining steadily, with a significant 5.7 million barrel drop reported by the Energy Information Administration (EIA). This decline in stockpiles, coupled with rising gasoline prices, is bolstering the crack spread for refiners.

Additionally, the U.S. purchase of approximately 3.25 million barrels of oil for the Strategic Petroleum Reserve indicates a proactive approach to managing domestic energy needs. This strong demand, particularly in the U.S., is a key driver in the current oil price rally.

Short-Term Outlook

The crude oil market, buoyed by robust U.S. demand and supply pressures from geopolitical tensions, leans towards bullish.

Looking ahead, the market is awaiting the Federal Reserve’s FOMC meeting outcome for direction. This event could significantly influence future trends.

Meanwhile, Light Crude Oil futures are expected to potentially consolidate within the $80.52 to $82.68 per barrel range, as the market balances current supply-demand factors with anticipated movement in the U.S. Dollar amid Fed policy shifts.

Technical Analysis

Light crude oil futures are rallying on Thursday, following through to the upside following yesterday’s powerful surge. This puts the market in a position to challenge the recent main top at $80.85.

Taking out $80.85 and sustaining the rally, could trigger an acceleration into the resistance at $82.68.

Meanwhile, the market remains well supported with its sustained strength above the 200-day moving average support at $77.00.