Key Points:
Oil prices had settled higher in the previous two sessions but fell after data from the American Petroleum Institute revealed a 1.64 million barrel increase in U.S. crude stocks, surpassing analysts’ expectations of a 300,000-barrel rise.
Despite this, gasoline and distillate fuel inventories fell by 3.5 million barrels, providing some relief to market sentiment.
Picture: Crude oil rises to 71.488, with bullish momentum while traders watch key resistance at 72.073 for further direction, as seen on the VT Markets app.
The chart closed at 71.488, reflecting a positive trend of 2.35% for the session. The price ranged between a low of 71.298 and a high of 71.513.
After a steady uptrend, the market has pulled back slightly from its peak of 72.073. The moving averages (5, 10, 30-period) show a bullish alignment, with the price trending above these averages, suggesting sustained buying pressure.
However, prices are consolidating around the 71.500 level. The MACD (12, 26, 9) indicates weakening bullish momentum as the histogram shows diminishing positive bars, signalling a potential correction or slowdown in the uptrend.
Jim Ritterbusch, of Ritterbusch and Associates, highlighted the challenge of navigating the oil market’s rapid fluctuations, noting that maintaining positions on either side of the market has become increasingly difficult due to the swings between oversold and overbought conditions.
In the Middle East, geopolitical tensions continued to impact market outlooks as Israel intensified attacks on Gaza and Lebanon.
Diplomatic efforts are ongoing, with U.S. Secretary of State engaging in extended discussions with Israeli leaders to push for increased humanitarian aid into Gaza.
On the heels of these tensions, Israel confirmed the killing of Hashem Safieddine, heir apparent to Hezbollah’s leader Hassan Nasrallah, who was killed last month.
The developments in the region continue to keep oil traders on alert as supply disruptions remain a potential risk.
Looking ahead, Goldman Sachs forecasted that oil prices will average $76 a barrel in 2025, citing a moderate surplus in crude and spare capacity among OPEC+ producers.
This outlook aligns with expectations of a recovery in oil demand, particularly from China, the world’s largest crude importer.
Beijing’s ongoing economic stimulus efforts have led some analysts to raise their expectations for future oil demand, further supporting prices.
The official U.S. government oil inventory data, expected later on Wednesday, will be closely watched by market participants.
This data release could further influence price movements, depending on whether it confirms the larger-than-expected inventory build or reveals any surprises.
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