FxNews—On Wednesday, the price of WTI crude oil futures fell to $73.30 for each barrel. This decrease follows a notable 4.6% drop from the day before. The main reasons for the lower prices are a lack of strong demand and an increase in oil supply.
The 4-hour chart below demonstrates the oil price and the key support and resistance levels.
Unexpected Inventory Surge
Recent data from the American Petroleum Institute (API) revealed a surprising increase in U.S. crude oil stocks, with nearly 11 million barrels added, surpassing expectations. This significant rise in inventories suggests that oil is more abundant than many had anticipated, which can lead to further drops in oil prices.
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Revised Demand Projections
The U.S. Energy Information Administration (EIA) has also adjusted its future outlook for oil demand. By 2025, they expect demand to be lower, mainly due to China’s and North America’s economic slowdowns.
This revision adds more pressure to the already declining oil prices.
Geopolitical Tensions and Oil
The oil market experienced additional volatility on Tuesday following news of a potential ceasefire between Hezbollah and Israel. Despite this development, there are ongoing worries about possible Israeli military actions targeting Iranian oil facilities, which could disrupt oil flows and affect market stability.
Weather Threats to Oil Supply
Hurricane Milton is on course towards Florida’s Gulf Coast, posing a significant threat to disrupt gasoline supplies. Florida is one of the largest oil-consuming states in the U.S., and any impact on its supply chain could have widespread repercussions on local and national markets.