Crude oil price sees upward momentum amid tight supply and inventory drawdowns
WTI crude oil rises amid tight supply and inventory drawdowns
Crude oil prices are climbing, with WTI trading near $75 per barrel, as the market reacts to signs of tightening supply and declining inventories. According to the American Petroleum Institute (API), U.S. crude stocks fell by 4.022 million barrels last week, significantly exceeding expectations of a 0.25 million-barrel decline.
This marks the fourth consecutive weekly drawdown, reinforcing bullish sentiment. Additionally, traders are watching for confirmation from the U.S. Energy Information Administration (EIA) report, which could further boost prices if it reveals a larger-than-expected draw.
USOIL price dynamics (Oct 2024 - Jan 2025) Source: TradingView.
OPEC Cuts and Geopolitical Risks Bolster Oil Prices
OPEC's December production fell by 50,000 barrels per day (bpd), influenced by field maintenance in the UAE. Meanwhile, Iranian output dropped amid rising geopolitical tensions, contributing to tighter global supply. Western sanctions on Russia and Iran have increased demand for Middle Eastern oil, prompting Saudi Arabia to raise prices for Asian buyers for the first time in three months. Additionally, China’s Shandong Port Group banned U.S.-sanctioned oil vessels, further straining supply channels.
Technical Outlook and Economic Indicators
WTI's recent breakout above the 200-day moving average at $72.36 signals strong upward momentum. Immediate resistance stands at $76.10, with a potential move toward $77.36. Analysts caution that a reversal below the $73.12 pivot point could trigger selling pressure. Meanwhile, robust U.S. labor data has fueled expectations of sustained economic growth, reinforcing demand for crude oil. However, China's recent tax hikes on fuel oil imports may temper demand, potentially softening spot premiums for Russian fuel oil.
Looking ahead, the EIA inventory report and geopolitical developments will be pivotal in shaping market sentiment. Traders remain optimistic but cautious, with the $77.36 resistance level as a key milestone.
In our previous analysis, we noted that WTI's price hovered near $73 as market sentiment remained mixed due to China’s economic slowdown and rising non-OPEC supplies. This trend persists, though tighter OPEC production and bullish economic data have reinforced upward momentum.
