Despite increasing geopolitical tensions in the Middle East, WTI, a standard US crude oil measure, has been declining and failed to stop its downward movement as it’s still trading below the $76.50 level.

However, the downward trend was driven by concerns about global oil demand from the IEA. Furthermore, traders are making money from the recent rise in crude oil prices, which is causing a small drop in WTI prices this month.

When traders notice an increase in crude oil prices, they sell their oil holdings to profit from the surge. This selling activity can exert downward pressure on the price of WTI oil.

In contrast to this, the increasing geopolitical tensions in the Middle East were seen as a key factor that kept the lid on any additional gains in the crude oil price. Meanwhile, the bearish US dollar, pressured by the dovish Fed stance, was seen as another key factor that may help limit the oil price’s losses.

This is because oil is priced in dollars, so when the dollar weakens, it takes fewer dollars to buy the same amount of oil. As a result, a weaker dollar can help limit the losses in oil prices.

Impact of IEA and OPEC Forecasts on Crude Oil Prices

It is worth noting that the International Energy Agency (IEA) recently lowered its prediction for oil demand growth in 2024. They now expect global demand to increase by 1.22 million barrels per day (bpd) this year, which is less than what OPEC forecasted at 2.25 million bpd. These concerns about lower demand are causing WTI prices to drop.

Moving on, oil traders will keep an eye on the EIA Crude Oil Stocks Change and API Weekly Crude Oil Stock reports, scheduled for Wednesday and Thursday.

Therefore, the downward revision in oil demand growth by the IEA, coupled with OPEC’s higher forecast, is putting pressure on US oil prices, signaling downward movement in the US oil market.

Geopolitical Tensions in the Middle East and Rising Oil Prices

On the geopolitical front, rising tensions in the Middle East, including Israeli attacks in Lebanon and Gaza, alongside Houthi militant actions in the Bab el-Mandeb strait, are pushing oil prices up. Meanwhile, China criticized the US for saying no to a UN ceasefire for Gaza, calling it a signal for more violence.

The US suggested its temporary ceasefire plan and warned Israel not to invade Rafah. Despite many countries being against it, Israel is still determined to keep fighting in Gaza. This conflict is making the whole region less stable and increasing the chance of a bigger war.

Hence, rising tensions in the Middle East, fueled by Israeli attacks and Houthi actions, are driving up oil prices due to fears of supply disruptions.

Crude Oil Price Forecast: Technical Outlook