This week, the crude oil market continues its strong momentum. After oil prices surged and fell back on Monday, they rose again during the European trading session on Tuesday, indicating that the cold wave's impact on energy demand is still evident. According to analysis, during the cold wave in Europe and the United States, oil demand is expected to increase by 100,000 barrels per day, providing momentum for the rebound in crude oil prices.
Stock Data Reinforces Optimism
Early Wednesday, data released by the American Petroleum Institute (API) showed a significant decline in crude oil inventories, particularly a sharp decrease in Cushing region stocks. Although gasoline and diesel inventories increased, the strong performance of crude oil was clearly dominant. Following the announcement, oil prices continued to rise, further consolidating market concerns about tight supplies.
At this stage, there are few bearish factors in the crude oil market, and with low inventory levels, the cold wave, geopolitical conflicts, and sanctions provide room for short-term speculation on oil prices. This means that the driving force for downward adjustments in oil prices is not apparent, and the market is expected to maintain a strong operating pattern. Short-term price declines are mainly driven by technical correction needs rather than fundamental changes.
Tight Supply Supports Market Strength
Brent crude's performance this week is becoming increasingly strong, gradually aligning with WTI crude oil, with the spread noticeably strengthening. Analysts indicate that the current oil price increase is not solely driven by the cold wave. The tightening supply situation in the Middle East is becoming more apparent, further reinforcing market concerns about supply.
Meanwhile, as the world's largest oil importer, China's crude oil futures (SC) are performing even more robustly, with the spread with European and American markets continuing to widen. This reflects the domestic market's response to the tight oil supply situation. Similar to the market scenario in the first quarter of last year, this year is playing out in advance, further driving the strong continuation of oil prices.
Market Outlook and Rhythm
From market performance, oil prices rose strongly again on Tuesday, indicating that although there is some profit-taking at high levels, the overall strong situation has not ended. Analysts expect that the market might see a tug-of-war at high levels next, and investors should pay attention to timing, being wary of technical correction risks.
Overall, under the backdrop of low inventories and tight supplies, the crude oil market is expected to remain primarily strong in the short term. The cold wave, geopolitical issues, and global sanctions provide important support for the upward movement of prices, while technical adjustments might offer room for further market increases.
