Crude oil price surged higher on Tuesday, fueled by mounting U.S. output fears in the wake of Hurricane Francine’s devastation and expectations of shrinking U.S. crude stockpiles. The market held its breath as Brent crude futures for November edged up by 16 cents, or 0.2%, to $72.91 a barrel, while U.S. crude futures for October rocketed 34 cents, or 0.5%, to $70.43 a barrel by 0120 GMT.
The previous session saw both benchmarks rally, driven by the Gulf of Mexico’s supply disruptions due to Francine, all while Chinese demand concerns simmered in the background.
As investors brace for the U.S. Federal Reserve’s crucial interest rate cut decision later this week, the stage is set for further bullish momentum in oil markets. More than 12% of crude production and 16% of natural gas output in the U.S. Gulf of Mexico were offline, according to the U.S. Bureau of Safety and Environmental Enforcement (BSEE) on Monday.
The traders are keeping a close watch on the upcoming decision by the U.S. Federal Reserve on the interest rate cut. A lower interest rate will reduce the cost of borrowing and can potentially lift oil demand by supporting economic growth.
Both contracts settled higher in the previous session as the ongoing impact of Hurricane Francine on output in the U.S. Gulf of Mexico countered Chinese demand concerns ahead of this week’s U.S. Federal Reserve interest rate cut decision, which should prove positive for investor sentiment in oil.
More than 12% of crude production and 16% of natural gas output in the U.S. Gulf of Mexico were offline, according to the U.S. Bureau of Safety and Environmental Enforcement (BSEE) on Monday.
Today, all eyed on an expected drop in U.S. crude inventories, which likely fell by about 200,000 barrels in the week to Sept. 13.
However, still, lower-than-expected demand growth in China, the world’s largest crude importer, have capped price gains. China’s oil refinery output fell for a fifth month in August amid declining fuel demand and weak export margins, government data showed on Saturday.
Crude oil price gained over 2% yesterday, reaching a high of 5933 before settling at 5887, compared to the previous day’s close of 5770. Since September 10, 2024, prices have been enjoying a recovery rally from the low of 5501, gaining more than 3%.
With Crude oil price climbing from a low of 5501 since September 10, 2024, gaining over 3%, crude seems to be in a strong recovery mode. Technically, prices are consolidating in a bullish pattern, with immediate resistance at 5925. A break above this level could pave the way for further gains toward 5978–6035.
However, if the bulls lose momentum, we may see consolidation between 5890 and 5750. Watch out for the critical support at 5690—any slip below this level could trigger a downside move to 5610–5565.
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Commodity Samachar Securities
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