Oil prices climb as dollar weakens
U.S. dollar's slump and International Energy Agency's revised oil demand projections for 2024 fuel market optimism
Oil prices hit highest level since early December, benefiting from U.S. dollar's downturn
International Energy Agency (IEA) revises 2024 oil demand forecast upwards, signaling strong global consumption
Federal Reserve's signals of possible rate cuts in 2024 influencing financial markets
Economic forces driving oil markets
Oil prices have surged to their highest since December 5, continuing their upward trend for the second consecutive session. This gain has been largely driven by the weakening of the U.S. dollar following the Federal Reserve's latest policy statement. Additionally, the International Energy Agency (IEA) has revised its oil demand forecasts for 2024, projecting a growth of 1.1 million barrels per day, an increase from its previous estimate of 930,000 barrels per day.
The U.S. Federal Reserve's recent announcement of maintaining interest rates between 5.25% and 5.50%, the highest in 22 years, has also influenced oil prices. The Fed's statement hinted at a potential end to its interest rate hikes and highlighted considerations for future tightening policies.
In another significant development, the U.S. Energy Information Administration reported a decline in crude oil inventories by 4.3 million barrels, contrary to the expected decrease of about 2 million barrels. Meanwhile, China's economic data indicated a growth in retail sales and industrial production, though the figures were below market expectations.
Oil price movement and predictions
From a technical perspective, oil is trading within a descending channel, having recently rebounded from its lower limit at approximately $68.00 to around $72.20. The immediate resistance is anticipated around the $73.50 to $74.50 levels, representing a significant resistance zone and the upper boundary of the descending channel.
Should oil prices fail to surpass the $74.00 resistance level, a retracement towards the $70.00 support level might occur. Breaking below this level could extend the decline towards the $67.00 mark. Conversely, a successful breach above the $74.00 resistance could lead to further upward movement, potentially testing higher resistance levels at $76.50 and, if surpassed, possibly extending the rise towards $79.50.