Crude Oil price surged on Friday, heading for a third consecutive week of gains as traders focused on potential supply disruptions due to impending sanctions on Russia and Iran. Brent crude futures rose by $1.90, or 2.47%, reaching $78.82 a barrel, marking the highest level in nearly three months. Similarly, U.S. West Texas Intermediate (WTI) crude futures increased by $1.86, or 2.52%, to $75.78.
Over the past three weeks leading up to January 10, Brent has climbed approximately 8%, while WTI has jumped around 9%. According to Ole Hansen, head of commodity strategy at Saxo Bank, several factors are driving this surge. In the short term, cold weather across the U.S. is increasing demand for fuels, while longer-term concerns about additional sanctions are also influencing market sentiment.
Ahead of President-elect Donald Trump’s inauguration on January 20, there are rising expectations of tighter sanctions against Iran and Russia, particularly targeting Russia’s oil industry. Additionally, the U.S. weather bureau predicts below-average temperatures in central and eastern regions of the country, which could further boost fuel demand.
JPMorgan analysts forecast a significant year-over-year increase in global oil demand of 1.6 million barrels per day in the first quarter of 2025, largely driven by increased demand for heating oil and other fuels due to colder weather conditions.
Moreover, the premium on the front-month Brent contract over the six-month contract has reached its widest since August, indicating potential supply tightness amid rising demand. Concerns about inflation are also contributing to higher crude oil prices, as investors look to hedge against rising consumer prices by purchasing oil futures. Interestingly, oil prices have continued to rise even as the U.S. dollar has strengthened for six consecutive weeks, which typically makes crude oil more expensive for buyers outside the United States.
As can see in crude oil futures chart after a continues upside movement, prices consolidate around the daily resistance of 6400—6500, then prices took a retest from intraday support of 6250 and again bounce back towards target of 6500—6600.
Until then, Happy Trading!
Commodity Samachar Securities
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