empty
27.08.2024 01:32 PM
Oil Rises from the Ashes

Geopolitics, expectations for the start of the Federal Reserve rate cut cycle, positive news from the US and China, and risks of a production halt in Libya at 1.17 million bpd have revived oil prices. Brent quotes surged more than 7% over three trading days, bullish spreads for North Sea crude in the futures market rose from $62 cents to more than $100, and Exxon Mobil warned that there will be no reduction in demand until 2025. If producers do not increase investment in production, prices could jump fourfold due to reduced supply.

This forecast contrasts with the projections of the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA), which expect a gradual decrease in global demand for crude oil amid the transition to alternative energy sources. Combined with the gradual withdrawal of OPEC+ from commitments to reduce production, major Wall Street banks can lower their Brent forecasts. For instance, Goldman Sachs predicts that the average Brent crude prices will be $77 per barrel in 2025 due to a market surplus, while Morgan Stanley estimates a range of $75-78.

So far, pessimistic scenarios have not materialized. Oil inventories at Cushing have fallen to six-month lows amid rising demand from U.S. refineries. The Fed's readiness to start a monetary easing cycle should theoretically boost demand for crude oil in the U.S. At the same time, the acceleration in the growth of industrial profits for Chinese companies from 3.6% to 4.1% year-over-year in July is seen as a ray of light in an otherwise cloudy economic outlook for China.

Dynamics of Oil Inventories at Cushing

This image is no longer relevant

Hopes for increased demand in the world's largest oil-consuming countries, combined with supply problems from North Africa and the Middle East, are fueling bullish attacks on Brent. The ongoing political crisis in Libya is leading to a reduction in exports and production. The latter is estimated at 1.17 million bpd, approximately 1% of the global output.

Another 3-4% of global supply could be affected in the event of a direct conflict between Iran and Israel. After recent exchanges of strikes between Jerusalem and Hezbollah, the conflict seemed to subside, but U.S. intelligence does not rule out retaliation from Tehran. Israeli retaliation could target Iran's oil infrastructure, potentially triggering a sharp increase in Brent prices.

Dynamics of Industrial Profits in China

This image is no longer relevant

This image is no longer relevant

Moreover, neither Hezbollah nor Jerusalem accepted each other's adjustments to the U.S. plan for a ceasefire in Gaza. Geopolitical risks in the Middle East have not disappeared, and combined with the rise in global oil demand and supply issues from Libya, this contributes to rising prices.

Technically, on the daily chart, Brent is forming a 1-2-3 reversal pattern. It's advised to hold long positions initiated from $79.30 per barrel and potentially increase them if the resistance at $82.55 is breached.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/USD Pair Overview – March 25: The Pound Rises Before It Even Wakes Up

On Monday, the GBP/USD currency pair again showed upward movement. The pound sterling began rising overnight despite no clear reasons or fundamental drivers. Yet the market on Monday clearly demonstrated

Paolo Greco 04:02 2025-03-25 UTC+2

EUR/USD Pair Overview – March 25: The Euro Continues to Creep Downward in a Correction

The EUR/USD currency pair showed relatively low volatility on Monday. However, looking at the chart below, it becomes clear that volatility hasn't been high recently—aside from a few days several

Paolo Greco 04:02 2025-03-25 UTC+2

EUR/USD: PMI Indices and WSJ Insider Reports

On Monday, EUR/USD traders concentrated on factors that benefitted the U.S. dollar, while negatively impacting the euro. Insider reports from U.S. media concerning the "April 2 tariffs" supported the pair's

Irina Manzenko 00:00 2025-03-25 UTC+2

USD/JPY. Analysis and Forecast

At the start of the week, following the release of a weaker Japanese PMI, the yen came under pressure. This, combined with news of narrower and less aggressive retaliatory tariffs

Irina Yanina 13:20 2025-03-24 UTC+2

XAU/USD. Analysis and Forecast

Today, gold prices remain low but are holding above the psychological level of $3000, which serves as an important support. News that emerged over the weekend indicates that U.S. President

Irina Yanina 10:25 2025-03-24 UTC+2

The Market Fell Into a Pit It Dug for Others

What drives the markets? Fear? Greed? At the moment, disappointment is far more significant. Investors are realizing that Donald Trump's tariff policy will not lead to anything good

Marek Petkovich 09:23 2025-03-24 UTC+2

Markets Are Tired of Falling. Investors Look for Growth Triggers (CFD contracts on #SPX and #NDX futures may rise on positive U.S. economic data)

Global financial markets continue to swing back and forth amid uncertainty over the actual impact on the economies of various countries targeted by Donald Trump's tariff hikes, which have prompted

Pati Gani 09:23 2025-03-24 UTC+2

EUR/USD Weekly Preview: PMI and IFO Indices, U.S. GDP, and Core PCE Index

The upcoming week's economic calendar is packed with important fundamental events. Macroeconomic reports will either help EUR/USD sellers consolidate within the 1.07 range or enable buyers to hold above

Irina Manzenko 06:52 2025-03-24 UTC+2

What to Pay Attention to on March 24? A Breakdown of Fundamental Events for Beginners

Eight macroeconomic events are scheduled for Monday. Preliminary March readings of business activity indices in the manufacturing and services sectors will be published in Germany, the Eurozone, the U.S

Paolo Greco 06:08 2025-03-24 UTC+2

USD/JPY. Analysis and Forecast

Today, following the release of data showing a February slowdown in the national Consumer Price Index (CPI), the Japanese yen continues to trade with a negative tone, creating uncertainty

Irina Yanina 11:07 2025-03-21 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.