The European Union also tightened sanctions on Russia’s “shadow fleet,” a network of ships bypassing the G7 price cap on Russian crude.…
Political upheaval in the Middle East added uncertainty to the oil market. Syrian rebels deposed President Bashar al-Assad, ending his decades-long regime but raising the potential for broader regional tensions. While Syria’s oil production is negligible, its alliances with Russia and Iran could influence regional supply security.
Chinese crude imports surged by more than 14% year-over-year in November, breaking a seven-month streak of declines. However, much of this increase appears to be tied to stockpiling rather than a robust recovery in consumption. Concerns persist over China’s long-term demand, given its economic pivot toward renewables and electric vehicles.
China’s announcement of a “moderately loose” monetary policy boosted expectations for higher crude demand. This marked the country’s first easing of monetary policy in over a decade, aimed at addressing weak economic growth, low consumer confidence, and a faltering property market.
Light crude oil futures climbed 4.52% this week as of Thursday, reflecting a mix of supportive and limiting factors that shaped market activity. Key drivers included Chinese economic policy changes, Middle Eastern unrest, U.S. inventory levels, and global supply forecasts.
Light crude oil futures climbed 4.52% this week as of Thursday, reflecting a mix of supportive and limiting factors that shaped market activity. Key drivers included Chinese economic policy changes, Middle Eastern unrest, U.S. inventory levels, and global supply forecasts.
China’s announcement of a “moderately loose” monetary policy boosted expectations for higher crude demand. This marked the country’s first easing of monetary policy in over a decade, aimed at addressing weak economic growth, low consumer confidence, and a faltering property market.
Chinese crude imports surged by more than 14% year-over-year in November, breaking a seven-month streak of declines. However, much of this increase appears to be tied to stockpiling rather than a robust recovery in consumption. Concerns persist over China’s long-term demand, given its economic pivot toward renewables and electric vehicles.
Political upheaval in the Middle East added uncertainty to the oil market. Syrian rebels deposed President Bashar al-Assad, ending his decades-long regime but raising the potential for broader regional tensions. While Syria’s oil production is negligible, its alliances with Russia and Iran could influence regional supply security.
The European Union also tightened sanctions on Russia’s “shadow fleet,” a network of ships bypassing the G7 price cap on Russian crude. Increased enforcement of these measures could further restrict Russian oil exports, creating potential upward pressure on global prices.
Inventory data from the United States presented a mixed picture for crude markets. Crude oil stocks fell by 1.4 million barrels last week, indicating tighter supply. However, gasoline and distillate inventories surged by 5.1 million barrels and 3.2 million barrels, respectively—far exceeding expectations. These increases suggest continued softness in demand for refined products.
Meanwhile, the Energy Information Administration (EIA) projected U.S. oil output to rise to 13.52 million barrels per day (bpd) by 2025. This forecast underscores strong domestic production, which could weigh on prices as OPEC+ continues to limit output to stabilize the market.
This week’s U.S. inflation report aligned with expectations, supporting the case for a Federal Reserve interest rate cut. Traders are now betting on monetary easing at next week’s Fed meeting, which could boost economic activity and oil demand in the world’s largest consumer of crude.
The inflation data also fueled optimism about broader energy consumption trends, particularly as lower borrowing costs encourage industrial growth and consumer spending. This has the potential to provide crude markets with a short-term tailwind.
The International Energy Agency (IEA) and OPEC presented divergent views on the future of the oil market. The IEA predicted a supply surplus of 950,000 barrels per day in 2024, rising to 1.4 million barrels per day by 2025 if OPEC+ relaxes production cuts. This outlook reflects the challenges of managing non-OPEC supply growth and sluggish demand in key markets.
Conversely, OPEC downgraded its 2024 demand growth forecast for the fifth consecutive month, citing weaker-than-expected consumption in Asia. Still, optimism surrounding China’s stimulus measures and potential global economic recovery has kept oil prices supported for now.
The main trend is down. It will change to up on a trade through $77.78. A trade through $63.36 will negate the reversal bottom and signal a resumption of the downtrend.
The minor trend is also down. A trade through $71.51 will change the minor trend to up and shift momentum to the upside.
The long-term range is $87.53 to $61.30. The market is currently trading on the bearish side of its 50% level at $74.42. The price level is a potential trigger point for an acceleration to the upside.
The intermediate-term range is $61.30 to $81.75. The market straddled the lower end of its retracement zone at $69.11 for a fourth straight week with the upper end at $71.53 still a major resistance level.
The direction of the Weekly Light Crude Oil Futures market the week-ending December 20 is likely to be determined by trader reaction to $69.11.
A sustained move over $69.11 will signal the presence of strong counter-trend buyers. If this creates enough near-term momentum then we could see a test of the 50% level at $71.53 and a potential acceleration into the major 50% level at 74.42. Overcoming this level with conviction could trigger an acceleration to the upside with major tops at $77.78, $80.03 and $81.75 over the near-term.
A failure to sustain a move over $69.11 will indicate that strong sellers are still controlling the prices action. It will also confirm that the market is still in “sell the rally” mode. This could drive prices toward minor support at $66.53 and intermediate support at $63.36. The major support is $61.30.
The near-term outlook for light crude oil futures remains cautiously optimistic. Bullish factors include China’s policy changes, the potential for a U.S. interest rate cut, and geopolitical risks supporting prices. However, bearish pressures from high inventories, questions about the sustainability of Chinese demand growth, and surplus projections from the IEA temper enthusiasm.
A sustained break above $69.11 per barrel could encourage further gains, especially if demand improves or supply tightens unexpectedly. Conversely, weaker-than-anticipated economic data or larger inventory builds may lead to renewed selling pressure. With these mixed signals, traders are closely monitoring developments to assess the market’s next move.