Oil News: Supply Fear vs. Oil Demand Sets Up a Pivotal Week for Brent Crude

Brent Crude Holds Above $100 as Supply Fear Runs the Show

Spot Brent crude oil finished the week ending April 24 near $107, posting a sharp weekly gain as supply fears tied to Middle East tensions overwhelmed early signs of softening demand.

Technical Outlook

Spot Brent is in an uptrend according to the weekly swing chart. However, the market is locked inside the $120.00 to $81.50 trading range, it established the week-ending March 13. It is currently testing the retracement zone of this range at $100.75 to $105.29. Trader reaction to this area will set the tone for the week.

The longer-term range is $58.98 to $120.00. Its retracement zone at $89.49 to $82.29 provided support two weeks ago, stopping a steep price slide at $87.32.

This week, a sustained move over $105.29 will set a bullish tone this week with potential upside targets $114.72 and $120.00. A sustained move under $100.75 will signal the return of sellers. If this creates enough downside momentum then look for a possible retest of $89.49 to $82.29.

With the market clearly holding well above the 52-week moving average at $72.86, the market is likely to remain in buy the dip mode.

Supply Fear Drove the Move

Spot Brent crude oil opened the week just under $100 and the Hormuz headlines hit almost immediately. I’ve seen this market react to shipping risk before and the pattern never changes. Bids moved on the threat alone. Traders didn’t wait for a single barrel to go missing.

By Wednesday Brent was printing $105 to $107. The shipment delays had moved past rumor at that point. Tanker data was confirming it. Fewer vessels moving, cargoes backing up, prompt availability shrinking fast. Nobody wanted to be caught short with those numbers coming in. The front of the curve caught a bid and held it all week.

Friday’s close at $106.71 locked it in. This market buys lost barrels. Real or threatened, it doesn’t matter.

Demand Is the Ceiling, Not the Floor

What I kept watching all week was the demand side quietly bleeding the rally. At $107 crude, buyers start doing the math and the math doesn’t work for a lot of them. That showed up in the consumption figures. It showed up in refiner margins. Crude was running faster than products and that’s a problem refiners don’t ignore for long.

The tell was how fast Brent dropped every time a headline hinted the tension might ease. That’s not a market with conviction on the upside. Supply fear was holding the price up and demand was leaning on it from the other side. That combination doesn’t produce a sustained move. It produces a grind.

What I’m Watching

In my view, supply fear drove this market all week and demand acted as a ceiling, not a driver. As long as barrels stay restricted, Spot Brent crude oil should hold above $100. But weak demand means the rallies don’t have much room to breathe until something changes on the consumption side.

More Information in our Economic Calendar.