Oil Futures Show Modest Gains Following Chevron’s License Revocation

Light crude oil futures rebounded slightly to $69.40 after a low of $68.36. The market reacted positively to President Trump’s revocation of Chevron’s Venezuelan license, raising supply concerns. Technical indicators show mixed signals with crucial resistance levels at $70.35 and $70.60. Traders are focused on potential U.S. Strategic Petroleum Reserve purchases amidst fluctuating stock data and geopolitical tensions.

On Thursday, light crude oil futures rebounded slightly, trading at $69.40, rising by $0.78 or 1.14%. This comes after the prices touched their lowest point since December 27, at $68.36. The market is experiencing mixed technical indicators, with immediate support situated at $67.06 and resistance at $70.35 and the 200-day moving average at $70.60, creating challenges for bullish momentum.

The oil market received a significant boost following U.S. President Donald Trump’s rescission of Chevron’s license to operate in Venezuela. This cancellation reverses a previous license granted by former President Joe Biden, which allowed Chevron to export approximately 240,000 barrels per day—over 25% of Venezuela’s oil output. This policy shift has intensified supply concerns in a sensitive oil market, particularly as it supports short position unwinding after recent unfavorable trading conditions.

In response to potential market support, President Trump indicated an intention to replenish the U.S. Strategic Petroleum Reserve (SPR), contrasting sharply with former President Biden’s use of the reserve to reduce fuel prices. This prospective government buying could provide a temporary support level for oil prices if initiated near present trading levels. Traders remain focused on this possible development.

Recent data from the Energy Information Administration (EIA) revealed an unexpected decline in U.S. crude stockpiles, which fell by 2.3 million barrels to 430.2 million barrels, opposed to an anticipated increase of 2.6 million barrels. However, Cushing, Oklahoma’s inventory rose by 1.3 million barrels to 24.6 million, marking its highest level since November. Gasoline inventories increased by 400,000 barrels, while distillate stockpiles surged by 3.9 million barrels, exceeding projections, indicating mixed product inventory data.

Despite the slight rebound in light crude futures, market sentiment remains cautious, facing resistance levels around $70.35 and $70.60. A breach of the $67.06 support threshold could lead to deeper sell-off scenarios, while exceeding $70.60 might prompt a more substantial recovery. Traders should remain vigilant regarding potential SPR purchases and developments related to Venezuelan crude supply, as geopolitical tensions may influence market dynamics.

In summary, light crude oil futures have shown a modest recovery, buoyed by geopolitical factors such as the revocation of Chevron’s license in Venezuela and potential U.S. government action regarding the Strategic Petroleum Reserve. Technical indicators suggest mixed signals, with key resistance levels posed at $70.35 and $70.60. Caution prevails in the market, with traders closely monitoring stockpile trends and geopolitical developments affecting supply and demand dynamics.

Original Source: www.fxempire.com