Oil prices saw solid losses earlier in the week to see mid-March lows around $83.03 during the previous session. Brent crude has bounced above the $84 figure since then, but refrains from a more decisive bounce so far. Of note, the oil price is on track for its biggest weekly losses in three months, shedding over 6% so far this week.
Oil was pressured by hopes for a deal to bring about a ceasefire in Gaza. A ceasefire, if agreed, would cut risks to oil supplies from the region. Besides, massive buildup in EIA inventories added to the decline. Crude oil inventories rose by 7.2 million barrels, contrary to the expected decrease of 1.1 million barrels. Gasoline inventories increased by 344,000 barrels, while a decrease of more than 1 million barrels was expected. US oil production remained unchanged at 13.1 million barrels per day. With rates at the highest in over two decades, concern about US oil demand persist, creating quite a limited upward potential for oil prices.
Sellers focus on $83 a barrel
Just a week ago, Brent crude was trading slightly below the $90 figure. Today, oil futures have settled just below $84 after a brief dip towards the $83 zone for the first time since mid-March. In the near term, oil needs to regain the $84 barrier on a daily (and weekly) closing basis in order to avoid another sell-off. On the downside, the nearest support now arrives at $83.30, followed by the $83 figure.
Of note, oil suffers losses despite dollar weakness. The greenback stays pressured on Friday after a two-day slide triggered by the Fed as the central bank’s tone was seen by traders as not as hawkish as expected.