Oil Prices Surge as U.S. Demand Strengthens – Can WTI Hit $70 Soon?
Oil prices climbed on Thursday, driven by stronger-than-expected demand in the U.S. and a weakening U.S. dollar.
Despite global geopolitical uncertainty, investors remain optimistic as data indicates a healthy demand outlook and potential Federal Reserve interest rate cuts.
The U.S. Energy Information Administration (EIA) reported that distillate inventories, including diesel and heating oil, fell by 2.8 million barrels, significantly exceeding the 300,000-barrel drawdown expected in a Reuters poll. Meanwhile, U.S. crude inventories rose by 1.7 million barrels, surpassing analysts’ expectations of a 512,000-barrel increase.
JP Morgan analysts emphasized that demand remains solid, with global oil consumption averaging 101.8 million barrels per day (bpd)—an annual increase of 1.5 million bpd. Even with lower air travel volumes, they noted, reduced travel activity is not an indication of weakening oil demand.
U.S. Dollar Weakness Supports Oil’s Uptrend
A declining U.S. dollar provided additional support to oil prices, making crude more affordable for international buyers. The dollar index has been in a downtrend since late February, and its weakness continues to prop up dollar-denominated commodities like oil.
“Throughout the week, the weakness of the dollar appeared to provide some support for oil prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. Oil traders remain optimistic about the Federal Reserve’s potential rate cut of 50 basis points by year-end, which could further weaken the greenback and enhance oil’s appeal.
With the Fed’s next policy decision in focus, market participants are watching for further signals of economic easing, which could sustain oil’s upward momentum.
Geopolitical Risks Keep Oil Markets Volatile
Global risk premiums have increased due to rising geopolitical tensions in the Middle East and Eastern Europe. Oil prices saw additional support after Israel launched a fresh ground operation in Gaza, breaking a ceasefire that lasted nearly two months.
Meanwhile, the U.S. intensified airstrikes on Houthi targets in Yemen, responding to attacks on ships in the Red Sea. President Donald Trump has vowed to hold Iran accountable for future Houthi aggressions, further escalating regional tensions.
In Europe, markets reacted to Ukrainian President Volodymyr Zelenskiy’s statement that strikes on energy facilities could end soon. This signaled a possible move toward a Russia-Ukraine ceasefire, which could lead to the easing of sanctions and a return of Russian crude oil supply to global markets.
Diplomatic talks between U.S. and Russian officials are scheduled to take place in Saudi Arabia on Sunday, with hopes of stabilizing energy markets.
WTI Crude Oil Technical Outlook: Bulls Eye $69.10 Breakout
WTI crude oil is trading around $67.27, consolidating near a critical resistance zone. The 50-day EMA at $67.06 is acting as a dynamic pivot, preventing significant downside movements.
Resistance Levels: Immediate resistance is at $67.79, followed by $68.45 and $69.10. A sustained breakout above these levels could push WTI toward $70.00+.
Support Levels: The nearest support stands at $66.05, with further downside risks toward $65.24 and $64.45 if selling pressure intensifies.
A break above $68.45 would indicate a trend shift, allowing WTI to aim for higher price targets. However, failure to break above $67.79 may result in a pullback.
Market Sentiment: Will Oil Prices Rally Higher?
WTI crude remains in a neutral-to-bullish range, with traders closely monitoring supply dynamics, Federal Reserve interest rate policy, and ongoing geopolitical developments.
Key catalysts for the next price move include:
U.S. inventory data and demand trends
Federal Reserve interest rate outlook
Geopolitical tensions and supply disruptions
If macroeconomic conditions remain favorable and oil demand stays robust, WTI crude oil could attempt to break above $69.10 in the near term.
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