EIA Report Supports Price Rally
The Energy Information Administration (EIA) reported a four-month high in oil production and demand for major products in April. This surge has provided additional support for oil prices. Analysts maintain a positive outlook on Brent despite concerns about U.S. gasoline demand and Chinese apparent demand.
Mixed Signals from China
China’s role as the world’s second-largest consumer and top crude importer remains critical. Recent data shows a mixed economic picture: smaller Chinese manufacturers experienced the fastest factory activity growth since 2021 due to overseas orders. Conversely, broader surveys indicated weak domestic demand and trade frictions causing another industrial sector contraction. This discrepancy raises questions about the accuracy of official figures versus actual industrial activity.
Geopolitical Tensions and Rate Cut Hopes
Geopolitical concerns in Europe and tensions between Israel and Lebanon’s Hezbollah are keeping a floor under oil prices. Additionally, traders are hopeful for an interest rate cut by the U.S. Federal Reserve. If WTI prices stay above the 200-day moving average at $79.52, the recent rally could extend towards $85 per barrel.
Hurricane Season’s Impact
The start of the Atlantic hurricane season, marked by Hurricane Beryl, poses a potential threat to oil and gas production and consumption in the Americas. This earliest recorded Category 4 hurricane could bring life-threatening conditions to the Caribbean’s Windward Islands.
Market Forecast: Bullish Outlook
Given the combination of anticipated supply deficits from OPEC+ cuts, peak seasonal demand, and geopolitical tensions, the short-term outlook for oil prices is bullish. Despite economic headwinds and mixed signals from China, the market is expected to see continued upward pressure on prices, with potential further gains if supportive factors persist.
Technical Analysis
Read More: Crude Oil News Today: Underpinned by OPEC+ Cuts, Capped by China Headwinds