The price of crude oil is seeking to continue the recent rally by breaking above the $80 level.
US OIL – Daily Chart
Oil is trading at the $81.26 level, and resistance at the $80.58 level is essential. Oil will need to find continued support here for a pushback to the $84.40 level.
Oil prices were higher on Tuesday after a New York Federal Reserve policymaker commented positively on the future path of interest rate cuts. Analysts expected Analysts to have a lower US crude inventory number.
The benchmark WTI and Brent contracts were up around 2% on Monday, closing at their highest levels since April. Prices were boosted after the New York Federal Reserve President John Williams said interest rates would gradually decrease.
“I think that things are moving in the right direction,” he said when asked if the Fed could see a rate cut in September based on current market conditions. A cut would depend on future data, he also said. However, other comments from Boston Fed’s Susan Williams and Richmond Federal Reserve Bank President Tom Barkin were more cautious.
On the supply side for oil, the market will be watching US stockpile data this week as they continue to assess whether demand is increasing during the summer driving season.
According to analysts polled by Reuters, US crude inventories are projected to have dropped by 2.3 million barrels last week.
Meanwhile, some analysts are still bullish on the impact of the OPEC+ group’s recent extension of production cuts.
“The latest guidance provided by OPEC+, as well as their unchanged 2.25 million barrels per day demand growth outlook, signals a stagnation in oil supply growth for 2024 and an apparent downside risk to production in 2025,” said Patricio Valdivieso, Rystad Energy vice president.
“It is hard to remain fully bearish when global oil supply growth appears decimated,” he added.
In other news, a Ukrainian drone strike caused a large fire at an oil terminal in Russia’s southern port of Azov, according to Russian officials. The seaport of Azov has two oil product terminals, which handle around 220,000 tons of fuel for export from January to May. The ongoing attacks on Russia’s infrastructure threaten physical global supply and boost the risk premium for crude futures.
According to official data, oil refinery output in May decreased by 1.8% from year-ago levels in China as refiners committed to planned maintenance. Higher crude prices also pressure refining margins and lower refiners’ profits.
