Chart of the day - OIL (13.01.2025)

Brent Crude futures (OIL) are down 0.5%, attempting to stabilize after yesterday’s sell-off, driven by rising hopes for a Ukraine peace deal and higher-than-expected U.S. oil stockpiles reported by the EIA. Additionally, weak Chinese macroeconomic data continues to signal an economic slowdown and declining consumption trends, raising uncertainty over potential PBoC stimulus measures. The overall outlook for oil demand remains uncertain.

Higher U.S. crude inventories suggest growing oversupply concerns, exacerbated by a more hawkish Federal Reserve stance on interest rates, which pressures the global oil demand outlook. Furthermore, the EIA has raised its forecast for U.S. crude production to 13.59 million barrels per day (bpd) in 2025, highlighting potential long-term supply risks.

For now, OECD oil demand growth in 2025 is projected at just 0.1 mb/d, while non-OECD countries are expected to see demand rise by 1.3 mb/d, with further growth anticipated into 2026. Despite a market reaction pointing to lower oil prices amid U.S.-Russia discussions on Ukraine’s future, traders are pricing in the probability of a peace deal rather than the deal itself, as Moscow-Kyiv relations remain highly uncertain. If a peace agreement is reached, concerns over a tight Russian oil supply could ease, with Asian shipping stocks already slumping on fears of declining oil freight rates.

OIL (H1 interval)

The $73 per barrel level remains a key technical support for OIL. A break below this zone could push Brent Crude below the critical $70 mark. For now, demand remains muted at the $73 level. With rising US crude inventories and production, a cautious Fed, and easing geopolitical tensions, OIL faces multiple downside risks. Falling below $70 is not out of the table if the peace deal in Ukraine will happen, potentially easing US sanctions on Russian oil. Traders will watch today PPI report from the US at 1:30 PM GMT.

 

Source: xStation5