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Oil Markets Cool After Strong Rally As Trade Optimism Fuels Recovery
(MENAFN- The Rio Times) Oil markets cool after a strong rally as trade optimism fuels recovery amid US-China negotiations. Explore the latest developments.
In early trading Saturday, crude oil benchmarks eased slightly, with Brent crude dipping 0.12% to $62.88 and WTI slipping 0.23% to $59.88.
This minor pullback follows an impressive rally over the past 48 hours that pushed both benchmarks higher by roughly 3% since Thursday.
Oil traders continue to position themselves ahead of critical US-China trade talks happening today in Switzerland between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.
Market optimism stems from signals that Washington might reduce Chinese import tariffs from current levels of 145% to a range between 50-80%.
Technical indicators provide a mixed but generally bullish outlook for crude. WTI's RSI reading of 65.42 signals strong buying momentum without reaching overbought territory.
The MACD indicator shows positive divergence at 0.37, confirming upward momentum. Both benchmarks have established solid support levels after bouncing approximately 10% from their April lows near $55.
Chart patterns reveal both WTI and Brent trading above their short-term moving averages, with prices testing the psychologically significant $60 and $63 levels respectively.
Technical analysts note a potential "Double Bottom" formation developing in Brent, suggesting further upside if prices can break above $70.05.
Oil Markets Cool After Strong Rally as Trade Optimism Fuels Recovery
Global supply fundamentals remain bearish despite the price recovery. OPEC+ production actually declined in April despite planned quota increases.
Output drops in Libya, Venezuela, and Iraq outweighed gains elsewhere. The group's compliance with agreed production quotas has deteriorated to 85%, with Russia and Iraq exceeding allotments.
Global oil production reached 104.3 million barrels daily in Q1 2025, creating a supply surplus of 1.2 million barrels versus demand.
This imbalance pushed global inventories to 4.85 billion barrels, levels unseen since the pandemic era of 2020.
Demand signals show improvement, particularly from China. Recent trade data revealed Chinese crude imports rose 7.5% year-over-year despite refinery maintenance periods.
US inventory data provided additional support, with crude stockpiles dropping by 2.5 million barrels last week.
Refined products joined the rally, with RBOB gasoline futures climbing 0.7% to $2.0996/gallon and ULSD futures adding 0.6% to $2.0520/gallon. Natural gas outperformed liquid fuels with a 4.51% gain to $3.754.
Analysts describe the market as entering a "reassessment phase" with traders weighing conflicting signals about supply and demand.
The outcome of today's US-China trade talks will likely determine the short-term direction, potentially pushing prices higher if negotiations progress positively.
In early trading Saturday, crude oil benchmarks eased slightly, with Brent crude dipping 0.12% to $62.88 and WTI slipping 0.23% to $59.88.
This minor pullback follows an impressive rally over the past 48 hours that pushed both benchmarks higher by roughly 3% since Thursday.
Oil traders continue to position themselves ahead of critical US-China trade talks happening today in Switzerland between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.
Market optimism stems from signals that Washington might reduce Chinese import tariffs from current levels of 145% to a range between 50-80%.
Technical indicators provide a mixed but generally bullish outlook for crude. WTI's RSI reading of 65.42 signals strong buying momentum without reaching overbought territory.
The MACD indicator shows positive divergence at 0.37, confirming upward momentum. Both benchmarks have established solid support levels after bouncing approximately 10% from their April lows near $55.
Chart patterns reveal both WTI and Brent trading above their short-term moving averages, with prices testing the psychologically significant $60 and $63 levels respectively.
Technical analysts note a potential "Double Bottom" formation developing in Brent, suggesting further upside if prices can break above $70.05.
Oil Markets Cool After Strong Rally as Trade Optimism Fuels Recovery
Global supply fundamentals remain bearish despite the price recovery. OPEC+ production actually declined in April despite planned quota increases.
Output drops in Libya, Venezuela, and Iraq outweighed gains elsewhere. The group's compliance with agreed production quotas has deteriorated to 85%, with Russia and Iraq exceeding allotments.
Global oil production reached 104.3 million barrels daily in Q1 2025, creating a supply surplus of 1.2 million barrels versus demand.
This imbalance pushed global inventories to 4.85 billion barrels, levels unseen since the pandemic era of 2020.
Demand signals show improvement, particularly from China. Recent trade data revealed Chinese crude imports rose 7.5% year-over-year despite refinery maintenance periods.
US inventory data provided additional support, with crude stockpiles dropping by 2.5 million barrels last week.
Refined products joined the rally, with RBOB gasoline futures climbing 0.7% to $2.0996/gallon and ULSD futures adding 0.6% to $2.0520/gallon. Natural gas outperformed liquid fuels with a 4.51% gain to $3.754.
Analysts describe the market as entering a "reassessment phase" with traders weighing conflicting signals about supply and demand.
The outcome of today's US-China trade talks will likely determine the short-term direction, potentially pushing prices higher if negotiations progress positively.
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