Light crude oil futures have rebounded slightly to $69.40 after a low of $68.36, influenced by U.S. President Trump’s revocation of Chevron’s license in Venezuela, which raises supply concerns. The market is cautious, with resistance levels at $70.35 and $70.60. Traders are observing potential purchases for the U.S. Strategic Petroleum Reserve as factors affecting oil prices moving forward.

Light crude oil futures are experiencing a modest rebound, trading at $69.40 as of 11:35 GMT, marking a rise of 1.14% after reaching a low of $68.36 earlier, the lowest since December 27. The market is facing mixed technical indicators, with immediate support at $67.06 and resistance at $70.35, alongside a notable hurdle at the 200-day moving average of $70.60.

Recent market movement has been influenced by U.S. President Donald Trump’s revocation of Chevron’s license to operate in Venezuela. This decision, reversing a prior license granted by former President Biden, halts Chevron’s exports of approximately 240,000 barrels per day, accounting for over a quarter of Venezuela’s oil production.

This policy shift has reignited supply concerns within the oil market, contributing to an unwinding of short positions due to fears of tighter supply. Additionally, the market is also evaluating the potential for increased demand spurred by reports of prospective purchases for the U.S. Strategic Petroleum Reserve (SPR).

President Trump’s indication of potentially replenishing the SPR has provided further support for oil prices. He is contrasting sharply with the previous administration’s approach in utilizing the reserve to lower gasoline prices. Such government purchases could establish a temporary floor for oil prices if they occur at current levels.

The Energy Information Administration (EIA) reported an unexpected decrease in U.S. crude stockpiles by 2.3 million barrels, down to 430.2 million barrels, which defies forecasts suggesting a 2.6 million-barrel increase. However, there was a notable rise in stocks at the Cushing, Oklahoma hub by 1.3 million barrels, the highest level since November.

Simultaneously, gasoline inventories saw an increase of 400,000 barrels to 248.3 million, while distillate stockpiles surged by 3.9 million barrels, far exceeding predictions of a 1.5 million-barrel draw. Refinery utilization increased to 86.5%, demonstrating strong refining activity despite the mixed results in product inventories.

Although light crude oil futures have recovered slightly, overall market sentiment remains cautiously bearish. Potential resistance near $70.35 and $70.60 may thwart any upward movement unless significant catalysts arise. Uncertainties regarding geopolitical issues, especially concerning Trump’s negotiations with Russia and Ukraine, further contribute to a bearish outlook.

Traders should closely monitor developments regarding SPR purchases and the status of Venezuelan crude supplies. If the market breaches the current support level of $67.06, this could prompt a more extensive sell-off, while breaking above $70.60 may facilitate a significant recovery. Although the sentiment leans bearish, potential shifts in market dynamics could alter this perspective swiftly.

In summary, light crude oil futures have shown modest gains following the revocation of Chevron’s license in Venezuela, highlighting renewed supply concerns. The market remains volatile, with immediate technical challenges and geopolitical uncertainties influencing sentiment. Traders are advised to monitor announcements regarding the U.S. Strategic Petroleum Reserve and Venezuelan crude supplies, as these factors could significantly sway market trends.

Original Source: www.fxempire.com

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