Light crude oil futures have shown slight gains after reaching a low of $68.36. The reversal of Chevron’s license in Venezuela by President Trump has heightened supply concerns. Additionally, potential U.S. government purchases for the Strategic Petroleum Reserve could provide market support. Current data indicates mixed inventory trends, suggesting a cautious market outlook as traders watch key resistance and support levels.
Oil futures have observed a slight recovery on Thursday after previously falling to $68.36, the lowest price since late December. Technical analysis indicates mixed trends, with support levels identified at $67.06 and resistance near $70.35, as well as the 200-day moving average at $70.60, which may hinder bullish progression.
As of 11:35 GMT, light crude oil futures are trading at $69.40, reflecting an increase of $0.78 or +1.14%. This uptick follows President Trump’s revocation of Chevron’s license to operate in Venezuela, which was previously granted by President Biden. Chevron’s operations, which export roughly 240,000 barrels per day, represent over a quarter of Venezuela’s total output, and its barred exports have reignited supply concerns in the oil market.
The cancellation of Chevron’s license is contributing to market fluctuations, particularly as traders reassess short positions established during earlier declines. Concurrently, reports of potential U.S. government purchases for the Strategic Petroleum Reserve (SPR) have provided additional support to oil prices. Trump has signaled his administration’s commitment to swiftly replenishing the SPR, contrasting with Biden’s strategy to utilize the reserve to mitigate gasoline prices.
Recent EIA data revealed an unexpected decrease in U.S. crude stockpiles, reporting a drop of 2.3 million barrels to 430.2 million barrels, contrary to predictions of a 2.6 million-barrel increase. Conversely, Cushing, Oklahoma, saw stock levels rise by 1.3 million barrels, marking the highest storage amount since November. Inventories of gasoline also rose by 400,000 barrels to 248.3 million barrels, while distillate stockpiles surged by 3.9 million barrels, exceeding expectations significantly.
Despite a modest rebound in light crude oil futures, market sentiment remains cautious, particularly with resistance levels approaching $70.35 and $70.60. A significant upward movement will require considerable bullish catalysts. With mixed inventory reports and ongoing geopolitical uncertainties related to Trump’s involvement in Russian-Ukrainian peace discussions, a bearish sentiment persists in the market.
Traders should closely monitor developments concerning SPR purchases and changes in Venezuelan crude supply. A breach below the support level of $67.06 could lead to further selling pressure; however, a rise above $70.60 may facilitate a more robust recovery. Though the market currently exhibits bearish tendencies, potential strategic purchasing and geopolitical developments may swiftly alter prevailing sentiments.
In conclusion, oil futures have rebounded slightly due to the revocation of Chevron’s Venezuela license and the potential for U.S. SPR purchases. However, market sentiment remains cautious due to mixed inventory data and geopolitical uncertainties. Traders must monitor upcoming developments in both supply and strategic reserve purchases closely, as these factors could significantly impact oil prices.
Original Source: www.fxempire.com
