Welcome to the Extreme Investor Network, where we provide expert analysis and insights into the world of trading, the stock market, and Wall Street. In this week’s blog post, we will be discussing the latest trends in the oil market and what it means for investors.
Chart Analysis Reveals Bullish Momentum
The chart analysis for WTI crude oil futures shows a clear bullish trend since June. The price has broken through key resistance levels and is currently approaching the next significant resistance at $86.24. If this level is breached, we could see prices surge towards $92.02, a major resistance point from September-October 2023.
Inventory Drawdowns Drive Weekly Gains
One of the primary drivers of this week’s price movement was a significant reduction in U.S. crude inventories. With a 12.2 million barrel decrease in crude stocks and a 2.2 million barrel drop in gasoline inventories, the market saw a bullish reaction. The American Petroleum Institute reported an even larger crude inventory draw, surpassing analysts’ expectations.
Summer Demand Outlook Strengthens
The summer demand outlook for gasoline received a boost with the American Automobile Association forecasting a 5.2% increase in Independence Day travel compared to last year. This positive sentiment aligns with predictions of a tighter market as fuel consumption rises in the coming weeks.
Geopolitical Tensions and OPEC+ Influence
Geopolitical tensions in the Middle East added a risk premium to oil prices this week. Additionally, OPEC+ continues to support prices through production cuts, despite slight output increases from Nigeria and Iran in June.
Shift in Weekly Market Sentiment
Hedge funds and money managers have been increasing their petroleum purchases in recent weeks, moving from a bearish to a more neutral stance. This shift has provided additional support to this week’s prices.
Price Targets and Weekly Forecast
Looking ahead, UBS projects global oil demand growth of 1.5 million barrels per day this year. Both UBS and JPMorgan have set Brent crude price targets at $90 per barrel in the coming months, with UBS expecting this level to be reached this quarter.
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