By NewsBlogger Oil prices have risen for a second day due to a drawdown in US crude stockpiles. Traders are speculating on the sustainability of US oil production and a potential game of chicken between OPEC and the US. At the same time, the IEA revises its estimates for oil demand growth and supply.
At a glance
- Oil prices rallied for a second consecutive day after US Crude data showed a stockpile drawdown.
- It was perceived as a game of chicken between OPEC and the US to see who would back down first.
- US Dollar trading higher after US Producer Price data release
- Analysts believe oil prices could be entering a broad uptrend
- IEA revises 2024 oil demand growth upwards, attributing it to improved US economic outlook and higher bunker fuel consumption
The details
Oil prices have been rallying for a second consecutive day following the weekly US Crude data release, which indicated a drawdown in stockpiles.
Traders had already anticipated a draw in recent days, raising questions about how long the US could sustain its pace of pumping up Oil.
There is a perceived game of chicken between OPEC and the US to see who will back down first.
The US Dollar and Federal Reserve
The US Dollar is trading substantially higher after the release of US Producer Price data, which came out higher across the board.
US Federal Reserve Chairman Jerome Powell stated that the Fed would consider cutting rates once the data showed significant decreases.
As of now, Crude Oil (WTI) is trading at $80.13 per barrel, while Brent Oil is trading at $84.32 per barrel.
Analysts’ Outlook
Analysts believe that oil prices could be entering a broad uptrend from a technical perspective.
Oil bulls are optimistic about further upside potential, with spreads on Oil futures favoring a bullish outlook.
To confirm a change in sentiment, the break above $80 needs to see a daily close.
The downside for oil prices is limited, with the 100-day and 55-day Simple Moving Averages situated near $75.57 and $75.61, respectively.
There is a pivotal level near $75.27 that could influence market sentiment.
The International Energy Agency (IEA) has revised its estimate of 2024 oil demand growth upwards by 110,000 barrels per day (b/d) to 1.3 million b/d.
This increase in demand is attributed to an improved economic outlook for the US and higher bunker fuel consumption resulting from attacks in the Red Sea region.
Oil inventories “on water” have surged due to tankers diverting around the Red Sea, while onshore oil stocks globally are at their lowest levels since at least 2016.
China’s demand growth estimate for this year has been revised downward by 80,000 b/d to 610,000 b/d.
The IEA has also lowered its estimate of average 2024 oil supply by 930,000 b/d to 102.86 million b/d, following OPEC+ voluntary output cuts and cold weather disruptions.
OECD industry stocks fell by 14.7 million barrels in January to the lowest level in 16 months.
The IEA’s demand growth estimate is less optimistic than OPEC’s, with OPEC predicting a growth of 2.2 million b/d this year.
S&P Global Commodity Insights forecasts oil demand to grow by 1.7 million b/d in 2024 and 1.08 million b/d in 2025.
WTI oil prices are testing intraday highs near the $80 mark, up 0.90% on the day.
Overall, the oil market is experiencing fluctuations influenced by a combination of supply and demand factors, geopolitical tensions, and macroeconomic indicators.
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| fxstreet.com |
|---|
| – Oil prices are rallying for a second consecutive day after the weekly US Crude data pointed to a drawdown in stockpiles – Traders were already positioned for a draw in recent days with markets asking questions on how long the US could keep up this pace of pumping up Oil – OPEC and the US are playing a game of chicken to see who will be the first one to lose – US Dollar is trading substantially higher after US Producer Price data came out higher on all fronts – US Federal Reserve Chairman |
| Jerome Powell said the Fed would cut once data came down significantly – Crude Oil (WTI) trades at $80.13 per barrel, and Brent Oil trades at $84.32 per barrel – Oil prices could be entering a broad uptrend from a technical angle – Oil bulls see more upside potential with spreads on Oil futures in favor |
| – The break above $80 needs to see a daily close in order to confirm a change in sentiment – Downside is limited with the 100-day and 55-day Simple Moving Averages near $75.57 and $75.61 respectively, and a pivotal level near $75.27 |
| spglobal.com |
|---|
| – The International Energy Agency raised its estimate of 2024 oil demand growth by 110,000 b/d to 1.3 million b/d |
| – The increase in demand is due to an improved economic outlook for the US and higher bunker fuel consumption from attacks in the Red Sea – Oil inventories “on water” have surged due to tankers diverting around the Red Sea, while onshore oil stocks globally are at their lowest since at least 2016 – China’s demand growth estimate for this year was lowered by 80,000 b/d to 610,000 b/d |
| – The IEA slashed its estimate of average 2024 oil supply by 930,000 b/d to 102.86 million b/d following OPEC+ voluntary output cuts and cold weather disruptions – OECD industry stocks fell by 14.7 million barrels in January to the lowest level in 16 months – The IEA’s demand growth estimate is less bullish than OPEC’s, with OPEC maintaining that demand would grow by 2.2 million b/d this year – S&P Global Commodity Insights forecast oil demand to grow by 1.7 million b/d in 2024 and 1.08 million b/d in 2025 – Oil prices have increased steadily due to the crisis for Red Sea shipping, with the Platts Dated Brent benchmark assessed at $84.27/b on March 13 |
| fxstreet.com |
|---|
| – The International Energy Agency raised the 2024 global oil demand growth forecast by 110,000 bpd to 1.3 mln bpd – WTI is testing intraday highs near the $80 mark, up 0.90% on the day |
