Oil prices experienced a decline followed by a rise on Thursday, resulting in a long lower shadow, indicating signs of a slowdown in the upward trend after a series of rebounds. During the Asian session, oil prices fell from their highs and began to adjust. Over the past three weeks, the rebound had already pushed Brent oil prices up by about $6, and SC crude oil by 46 yuan. Geopolitical and sanction factors have been fully priced into the market. Although oil prices are adjusting, the situation changed again as news broke during the night session.
Several European countries openly criticized Russia and declared that they would not lift sanctions against Russia, choosing instead to increase pressure on the U.S. and Russia by supporting Ukraine more strongly. Russian President Putin stated that Russia is prepared to work with Europe to resolve the Ukraine issue but criticized Europe's attempts to constrain Russia. Meanwhile, U.S. President Trump clearly expressed a desire to quickly bring about a ceasefire and announced that the U.S. would no longer provide financial support to Ukraine.
At this point, oil prices rebounded during their adjustment, breaking away from the previous downward trend. Despite mutual accusations from Russia and Ukraine regarding non-compliance with ceasefire agreements on energy facilities, the market remains filled with uncertainty over the resolution of this geopolitical conflict. The ongoing games driven by each party's interests continue to influence oil price fluctuations. Brent crude oil has recently performed strongly, as seen from the significant buying by funds, while SC crude oil has shown relative weakness this week.
The EIA report indicates that the oil market's inventory structure is relatively healthy, but as the second quarter begins, signs on the demand side are gradually emerging, especially with a marked decline in gasoline and diesel consumption in the United States. Similarly, gasoline and diesel consumption in the Chinese market is lower than the same period last year. Although there was a rebound in March, the overall weak demand trend remains apparent, suggesting a gradual slowdown in crude oil demand against the backdrop of China's energy transition.
As oil prices approach the resistance zone, the market has transitioned from rapid increases to a high-level oscillation phase. The complex effects of geopolitical factors, sanctions, and U.S. tariffs present significant challenges for further oil price increases. Unless there is a significant escalation in geopolitical tensions, the room for a substantial increase in oil prices is limited. Changes in market sentiment and expectations will continue to drive oil price fluctuations, and investors need to closely monitor the changes in pace.
