Crude Oil Prices Fluctuate Amid Supply Shifts, Demand Forecasts, and Sanctions on Russia

Crude oil prices gained on supply concerns but have given back most of their earlier gains, currently trading around $68.69 after hitting a low of $68.20. The fluctuations reflect recent U.S. crude inventory data that has influenced market sentiment.

 U.S. Crude Inventory Data

The U.S. Energy Information Administration (EIA) reported a decline of 1.4 million barrels in crude oil inventories for the week ending December 6, 2024, following a drop of 5.1 million barrels the previous week. The current inventory level is about 422 million barrels, which is 6% below the five-year average. While crude oil stocks fell, gasoline stocks increased by 5.1 million barrels, and distillate fuel inventories rose by 3.2 million barrels. This report indicates a tightening oil market, which could put upward pressure on oil prices.

OPEC's Revised Demand Forecast

OPEC has lowered its global oil demand growth forecasts for both 2024 and 2025 for the fifth month in a row. In its December 11, 2024 report, it cut its 2025 growth estimate by 90,000 barrels per day to 1.45 million bpd and reduced the 2024 forecast by 210,000 bpd to 1.61 million bpd. The changes are due to weaker demand in key regions like the Middle East, China, and India. Following the news, oil prices fell slightly as traders reacted to concerns about global economic growth and its impact on oil consumption.

EU Implementing New Sanctions on Russia

The European Union (EU) plans to impose new sanctions on Russia, focusing on its "shadow fleet" of oil tankers that bypass sanctions. Approved by ambassadors on December 11, 2024, these sanctions will affect around 52 additional tankers, raising the total targeted vessels to 79. The goal is to limit Russia's oil revenue, especially through old ships with unclear ownership that help avoid the G7's price cap of $60 per barrel on Russian oil. The sanctions will also hit individuals and companies that aid Russia in acquiring banned technologies for its military. EU leaders stress the need to keep pressure on Russia to weaken its military actions in Ukraine.

Technical Analysis and Trading Strategy

Crude oil faces significant resistance at $70.80; breaking above this level could lead to prices rising to $71.45 or even $72.60. Conversely, if prices fall below the near-term support of around $70, targets could drop to $69, $68, $67, or lower. Current market indicators suggest a bullish trend. A suggested trading strategy involves buying on dips around $70 with a stop-loss of around $69 for a target price of $72.50.