Crude Rallying Midweek
Following a firm move lower through Monday and Tuesday, crude prices are attempting to recover today with the futures market in the green across the European morning session. The move looks to be driven by some anticipation ahead of Trump’s upcoming Russia deadline on Friday for a ceasefire with Ukraine. Trump recently brought forward his deadline by around 40 days. With threats of fresh sanctions on Russia and secondary buyers of Russian oil if a ceasefire is not agreed, oil prices are faced with upside risks given the potential for a fresh supply squeeze. Indeed, even the recent OPEC+ output hike is seemingly being overlooked here.
Near-Term Risks
If a ceasefire isn’t agreed by Friday, we could see oil prices sharply higher into next week with the scale of the move dependent on the severity of US sanctions. If a ceasefire is agreed, however, this could turn oil prices heavily lower near-term, putting focus back on the recent OPEC+ output hike while removing the risk of supply disruptions linked to fresh US sanctions.
EIA Data Due
Looking ahead today, traders will also be watching the latest EIA inventories update. The group is expected to report a further 0.2-million-barrel surplus, down sharply from last week’s huge 7.7-million-barrel surge, which should keep crude prices underpinned. However, if we see another upside surprise today, this could cap the oil rally for now, highlighting weaker US demand.
Technical Views
Crude
The market is attempting to get back above the broken bull trend line with 67.45 sitting above as next resistance. If bulls can break above this area, focus will be on 72.61 as the next level to test. To the downside, 63.83 remains key support to watch with risks skewed towards deeper support at 57.42 is broken.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.