Brent crude prices have remained stable this week, caught in a tight trading range as market forces continue to battle for control. Today, the back-and-forth between buyers and sellers intensified, with a larger-than-expected drop in U.S. fuel supplies and rising tensions in the Middle East helping to counterbalance the impact of a stronger dollar.
U.S. government data revealed that distillate inventories, which include diesel and heating oil, fell by 2.8 million barrels last week. This was significantly more than the 300,000-barrel drop anticipated by analysts in a Reuters poll. Meanwhile, U.S. crude inventories increased by 1.7 million barrels, surpassing the forecasted rise of 512,000 barrels.
In the past hour, oil prices have shown a slight uptick following news of new U.S. sanctions on Iran. The U.S. imposed sanctions targeting an individual and several companies, including a small Chinese refinery, for purchasing and processing Iranian oil. According to the U.S. Treasury Department, Iran produces more than 3 million barrels of oil per day.
Despite these developments, analysts suggest that the recent price fluctuations may continue, with no clear direction in sight. The ongoing stimulus measures in China, combined with rising geopolitical risks in the Middle East, are expected to keep oil prices volatile. Additionally, the U.S. is set to announce new tariffs on April 2, 2025, which could further impact market sentiment depending on their scope.
Chevron’s Venezuela Operations in Focus
In other news, U.S. President Donald Trump is considering allowing Chevron to continue operating in Venezuela, despite allowing their sanction waiver to expire earlier this year. The idea was discussed during a White House meeting with oil and gas executives. The president and his team are also contemplating tariffs on countries that buy Venezuelan oil, a move aimed at limiting China’s influence in Venezuela’s oil sector.
Chevron has warned that if it leaves Venezuela, China could step in to fill the void. This concern resonates with Trump’s apprehensions about China’s growing presence in Latin America. Chevron currently exports around 240,000 barrels of Venezuelan oil to the U.S. every day, accounting for about a quarter of Venezuela’s total oil production.
Chevron had also planned to increase exports from its Petropiar project by 50% this year, reaching 143,000 barrels per day. However, these plans may depend on whether President Trump extends Chevron’s license and replaces some sanctions with tariffs. If the extension is granted, it could contribute to concerns over an oversupplied market, already a topic of worry for many analysts.
Market Outlook
Looking ahead, there are mixed signals about the direction of the oil market. While the latest oil inventory data suggests that the market may be slightly undersupplied in early 2025, many analysts believe that oil prices could remain stable as supply and demand balance out. Despite the warning signs, there is still potential for long periods of price consolidation moving forward.
Technical Analysis – Brent Crude
In terms of technical analysis, Brent crude prices have remained within a narrow range between $72.39 and $70.18 since March 12. The price action has been erratic, with bullish days often followed by bearish or indecisive ones.
One key indicator to watch is the 14-day Relative Strength Index (RSI), which is approaching the neutral 50 level on a daily chart. A break above this level could signal a shift in momentum, potentially pushing prices out of the current range.
Immediate resistance is seen at $72.39, with additional levels at $74.00 and $74.53. On the downside, support is at $70.18, followed by $69.52 and $68.70.
In summary, while the market faces uncertainties, technical indicators suggest that price fluctuations may continue within a defined range for the time being, with geopolitical risks and U.S. policy decisions playing key roles in determining future price movements.
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