Oil prices are on track for a second consecutive week of gains as traders anticipate a positive outlook for US demand in the short term. This comes as inventories fell more than expected last week. Additionally, the US Dollar Index is trading firmly above 105.50 with support from the Japanese Yen and Euro.
The increase in oil prices has come after slight retreats earlier in the week, with oil set to close in the green for the second week in a row. This has resulted in over 7% gains in the past two weeks. The drawdown in US stockpiles, coupled with the Southern belt in the US preparing for the impact of tropical storms, could lead to short-term supply disruptions.
The US Dollar Index, which measures the performance of the US Dollar against major currencies, is comfortably up in the higher 105.00 area and nearing 106.00. A recent market event involving Nvidia led to a massive move into the safe-haven Greenback. Additionally, European Purchasing Managers Index (PMI) numbers indicate a slowdown in the Eurozone economy, further supporting the Dollar’s strength.
Oil news and market movers continue to drive the market, with reports of falling crude stockpiles and disruptions in oil drilling and exporting due to bad weather in Texas and Mexico. Mexican State Oil Company Pemex is expected to begin processing crude at its Dos Bocas refinery by the second half of 2024. The Baker Hughes US Oil Rig Count will also play a crucial role as the hurricane season gets underway.
Oil technical analysis suggests more upside is on the horizon, with oil prices surpassing key levels. If Crude can maintain its current levels and close above $81.00, further upside towards the year-to-date high at $87.12 is possible. Support levels near $79.00 must hold to prevent a drop back to $75.
WTI Oil, or West Texas Intermediate Crude Oil, is a high-quality, easily refined type of Oil sourced in the United States. It is a benchmark for the oil market and its price is frequently quoted in the media. Supply and demand, global growth, political instability, and OPEC decisions are all key drivers of WTI Oil price. The weekly Oil inventory reports published by the API and EIA also impact oil prices, reflecting changes in supply and demand.
OPEC, a group of Oil-producing countries, plays a significant role in WTI Oil prices by deciding on production quotas that can tighten or increase supply. When OPEC decides to lower quotas, it can push up oil prices, while increases in production have the opposite effect. The decisions of OPEC+ also impact prices, with an expanded group that includes ten extra non-OPEC members such as Russia.
