Arslan Butt•Friday, January 24, 2025•2 min read
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Crude oil prices experienced a mixed session on Thursday, with WTI crude dipping to a one-and-a-half-week low.
The market initially saw gains following a weaker U.S. dollar and tightening global supply concerns driven by U.S. sanctions on Russian crude exports. However, prices reversed course after President Trump signaled pressure on Saudi Arabia and OPEC to lower oil prices, contributing to the downturn.
Geopolitical Tensions and Supply Constraints
Recent sanctions imposed by the U.S. on Russia’s oil industry have disrupted global supply chains, providing some underlying support to crude prices. Sanctions targeted major Russian oil exporters Gazprom Neft and Surgutneftgas, responsible for approximately 970,000 barrels per day (bpd) in exports—about 30% of Russia’s tanker flow. Further reductions in Russian crude exports were confirmed, with Bloomberg data showing a drop of 260,000 bpd to 2.75 million bpd in the past week.
Despite these supply challenges, bearish factors persist. Crude oil held on stationary tankers for at least seven days increased by 2.5% to 54.23 million barrels, signaling a buildup that could weigh on prices. Additionally, China’s crude imports declined 1.9% year-over-year to 553 million metric tons in 2024, reflecting weaker demand from the world’s largest importer.
Mixed EIA Data and Market Reactions
The latest report from the U.S. Energy Information Administration (EIA) presented a mixed picture for crude markets. On the bearish side, gasoline inventories surged by 2.3 million barrels to an 11-month high, exceeding expectations of 2.19 million barrels. However, crude inventories fell by 1.02 million barrels to a two-and-three-quarter-year low, surpassing the anticipated 400,000-barrel draw.
Key data highlights from the EIA report include:
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U.S. crude inventories are 6.4% below the five-year seasonal average.
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Gasoline inventories stand 0.7% below the seasonal five-year average.
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Distillate stockpiles declined unexpectedly by 3.07 million barrels against expectations of a 790,000-barrel build.
Ongoing production stability remains a point of interest, with U.S. crude output holding steady at 13.477 million bpd, just below the record high of 13.631 million bpd recorded in early December. Meanwhile, the Baker Hughes report indicated a decline in active U.S. oil rigs to 478, nearing a multi-year low.
Technical Analysis and Market Outlook
WTI crude oil is currently trading at $74.52, reflecting a modest 0.10% increase. However, the broader trend remains bearish, with prices confined within a descending channel. Immediate resistance stands at $75.77, aligning with the 50-day Exponential Moving Average (EMA) at $75.73, a key level capping upside potential. Further resistance is positioned at $77.14 and $78.55.
Support is established at $74.02, with potential downside extending to $72.85, followed by the critical level of $71.79, should bearish momentum persist. The current price action suggests that any rebound attempts may encounter selling pressure at resistance levels, while a sustained break below $74.02 could accelerate losses.
Key Insights:
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WTI crude remains under selling pressure within a downward channel, with resistance at $75.77.
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Immediate support at $74.02, with further downside risks toward $72.85.
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A breakout above the 50 EMA at $75.73 could indicate a trend reversal and renewed bullish momentum.
Market participants will closely watch geopolitical developments and upcoming inventory reports, which could influence near-term price action and provide direction for crude markets.
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
www.fxleaders.com