Bullish OPEC Report

Crude prices have been making their way higher this week, on the back of heavy selling over recent weeks. The uptick comes amidst a pullback in the US Dollar and has also been helped by a more positive outlook for OPEC. In its latest global outlook, OPEC reported that with global supply balances tight and Chinese demand still healthy, global demand is set to move higher by 2.5 million barrels per day this year.

Supply Risks

Commenting on the recent downside in oil markets, the group put the sell-off down to “exaggerated negative sentiment.” However, looking ahead OPEC did cite some risks on its radar. Chief among those was the renewed talks around restarting an Iraqi oil pipeline which, if confirmed, would see the return of around 0.5 million barrels per day to the market.

Middle East & USD Impact

Over recent weeks, oil markets have come under pressure as the initial reaction to news of the Israel-Hamas war abated. Fears of a broader Middle East conflict emerging have proven misplaced so far with the conflict largely contained for now. Looking ahead, however, there is room for oil prices to continue to recover if USD is seen weakening in response to the US inflation data due later today.

Technical Views

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Crude

The sell off in crude saw price breaking below the 77.64 level last week. However, price has since recovered above the level and with momentum studies moving higher, bulls are hoping to carve out a low here from which they can build. 82.59 will be the key test for the market with bulls needing a break higher to alleviate the bearish outlook. 

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