Overall Oil Performance
Oil is experiencing its most significant weekly gain since October, with an increase of over 5%.
This positive trend is attributed to various factors.
Contributing Factors
A decrease in oil reserves in the United States has contributed to the rise in oil prices.
The anticipation of additional economic stimulus measures in China has played a role in boosting oil prices.
Specific Price Levels
West Texas Intermediate (WTI) WTI surpassed $77 a barrel on Friday.
Brent crude crossed its key 200-day moving average for the first time since November.
Initiating Factors and Further Momentum
The rally in crude oil began with positive fundamental news and gained momentum through the influence of trading algorithms.
Geopolitical tensions, such as US strikes on Iran-backed Houthi rebels in Yemen, contributed to the increase in oil prices.
Geopolitical Events
Elevated tensions in the Middle East, including military actions in Yemen, influenced the oil market.
Drone attacks on Russian refineries amid the Ukraine conflict affected crude oil flows.
January Performance
Oil has seen a substantial gain of over 8% in January.
Supportive Factors
Support for the oil market comes from a significant reduction in US inventories.
Chinese efforts to stabilize their economy have also contributed to supporting oil prices.
Market Caution
Some caution among traders is observed due to expectations of robust supplies from non-OPEC (Organization of the Petroleum Exporting Countries) producers.
Demand Concerns
Concerns about slower demand growth, particularly in major importers like India, contribute to the cautious market sentiment.
Market Indicators
Crude’s timespreads indicate tighter conditions.
Brent’s three-month spread is in backwardation, which is a bullish pattern, indicating a notable increase in this pattern.