- Crude oil futures remain positive amid mixed supply dynamics and a better risk mood.
- US government revoked the license of Chevron, increasing the likelihood of an oil supply shortage.
- Market participants are closely monitoring the OPEC+ meeting and the US Q1 GDP data for momentum.
Crude oil futures have risen this week due to tighter supply, geopolitical uncertainty, and improved global energy market sentiment. The WTI crude surged to near $63.00, marking a second consecutive session of gains.
The bullish momentum came from OPEC+ maintaining production cuts, despite calls to boost supply for global economic recovery.
A major catalyst for the recent price spike was US government’s move to sanction operations in Venezuela. The decision to revoke Chevron’s license aims to limit the Maduro regime’s access to oil revenue.
Chevron is one of the few companies left with a presence in Venezuela. The company cut 800 jobs in Texas as a ripple effect of the foreign policy on the domestic energy sector. These developments further reduced the oil supply.
In parallel, Brent futures also gained, breaking beyond the $65.00 handle, marking a fresh top around $66.00 on Thursday. The breakout is taken as a shift in market momentum and it also reflects growing optimism amid relieved trade tensions.
The US federal court ruled against President Trump’s broad import tariffs, calling it illegal in the context of IEEPA. Despite the potential for an appeal, a temporary easing in global trade has boosted investor confidence, leading them to seek riskier assets like commodities.
The relief may be short-lived since the Trump administration plans to challenge the decision, potentially leading to renewed trade disputes. Moreover, the markets are alert as the US plans to impose sanctions on Russian crude oil exports. This could further tighten the oil supply. Supply-side risks, along with geopolitical issues and changes in energy policy, may lead to a significant short-term rally in oil markets.
Looking ahead, traders are bracing for the coming OPEC+ meeting. The discussions are expected to pivot around supply hikes, starting from July. Until a clear policy emerges, oil prices are expected to stay sensitive to geopolitics and macroeconomic indicators.
On the other hand, the US Q1 GDP data is expected to be released today. A positive number could boost oil prices in anticipation of increased demand.
