- Oil prices rise for the fourth consecutive day this week.
- Wednesday’s EIA report revealed that crude oil supply at Cushing fell to a seven-year low.
- The US Dollar Index is trading lower as focus shifts to the European Central Bank’s interest rate decision.
Crude oil is trading higher for the fourth consecutive day on Thursday, jumping to $70, after a 2.5% increase in price on Wednesday. The rally came after the Energy Information Administration’s (EIA) weekly report revealed that US reserves at Cushing fell to just 22.9 million barrels, the lowest level since 2007. Meanwhile , oil traders largely ignored OPEC’s latest forecasts, which revised global oil demand downward by 210,000 barrels per day.
The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against a basket of currencies, is trading softer with the focus shifting towards Europe. The European Central Bank (ECB) will make its final policy decision by 2024, with the most likely scenario being another interest rate cut amid controlled inflation and a contraction in economic activity in the region. In the US, Wednesday’s Consumer Price Index (CPI) data appeared to be enough for traders to increase bets on a rate cut at the Federal Reserve meeting next week.
At the time of writing, WTI crude oil is trading at $69.93 and Brent crude at $73.30.
Oil news and market movements: US reserves are running out
- Wednesday’s Energy Information Administration (EIA) report revealed that reserves at Cushing, Oklahoma, fell by the most since early September after a draw of 1.3 million barrels. This brings them to just 22.9 million barrels, their lowest seasonal level since 2007. Lower imports from Canada likely contributed to the reduction, Bloomberg reports.
- In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) cut consumption growth projections in 2024 by 210,000 barrels per day to a total of 1.6 million barrels per day, Reuters reports. This means that OPEC has reduced its projections by 27% since July.
- Russian oil company Rosneft has agreed to supply around 500,000 bpd of crude oil to Indian refinery Reliance, Reuters reports, citing three people familiar with the matter.
Oil technical analysis: It didn’t take much
The price of crude oil rose as volumes begin to decline towards the end of the year. Such a spike may occur when markets such as the commodities sector begin to see thinner volumes being traded. If there is another move higher this Thursday, the $71.50 level and beyond cannot be ruled out before Christmas.
The 55-day SMA at $70.04 is being tested and needs to see a daily close above it to become support. Further up, $71.46 and the 100-day SMA at $71.19 will act as strong resistance. In case oil traders can break above that level, $75.27 is the next pivotal level.
On the downside, it is too early to see if that 55-day SMA will act as support at $70.04. That means that $67.12 – a level the price held in May and June 2023 – remains the first solid support nearby. In case of a break, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the 2023 low.
US WTI Crude Oil: Daily Chart
Brent crude oil FAQs
Brent crude oil is a type of crude oil found in the North Sea that is used as a benchmark for international oil prices. It is considered “light” and “sweet” due to its high gravity and low sulfur content, making it easier to refine into gasoline and other high-value products. Brent crude oil serves as the reference price for approximately two-thirds of the world’s internationally traded oil supplies. Its popularity is based on its availability and stability: the North Sea region has a well-established infrastructure for oil production and transportation, ensuring a reliable and constant supply.
Like all assets, supply and demand are the key drivers of the Brent crude oil price. As such, global growth can be a driver of higher demand and vice versa for weak global growth. Political instability, wars and sanctions can disrupt supply and affect prices. Decisions by OPEC, a group of major oil-producing countries, are another key factor in the price. The value of the US Dollar influences the price of Brent crude oil, as oil is predominantly traded in US dollars, so a weaker US Dollar can make oil more affordable and vice versa.
Weekly oil inventory reports released by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of Brent crude oil. Changes in inventories reflect the fluctuation of supply and demand. If the data shows a drop in inventories, it may indicate an increase in demand, which drives up the price of oil. Higher inventories may reflect increased supply, which drives prices down. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, within 1% of each other 75% of the time. EIA data is considered more reliable since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide production quotas for member countries at semi-annual meetings. Their decisions often affect Brent crude oil prices. When OPEC decides to reduce quotas, it can restrict supply, driving up oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, the most notable of which is Russia.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
