Oil Climbs on Strong Demand and Supply Disruptions

Key Takeaways:

*U.S. EIA data showed surprise crude inventory draw, signaling strong consumption.

*Ukrainian strikes, stalled Kurdish exports, and reduced Venezuelan flows tighten supply.

*Trump’s UN remarks and looming Iran sanctions fuel speculation of more export curbs.

Market Summary:

Crude oil prices have extended their rally to multi-week highs, fueled by a convergence of resilient demand signals and mounting supply disruptions. The latest EIA data showed a surprise draw in U.S. crude inventories, defying expectations for a build, while gasoline and distillate stocks also fell sharply. These figures point to underlying consumption strength in the U.S. market, easing immediate concerns about weakening economic momentum. Together, they reinforce the view that demand remains robust enough to absorb near-term macro headwinds.

On the supply side, geopolitical risks are tightening the market further. Ukrainian drone strikes on Russian refineries and export infrastructure have disrupted fuel production and constrained flows, while Kurdish oil exports remain stalled and Venezuelan shipments have been scaled back due to new U.S. permit conditions. These developments are amplifying the perception of near-term physical tightness, pushing risk premiums higher as traders price in the possibility of deeper disruptions ahead.

Political rhetoric is also contributing to the bullish tone. President Trump’s assertive remarks at the UN, including calls for NATO to harden its stance against Russia and the reaffirmation of U.S. support for Ukraine’s territorial claims, have increased speculation over new sanctions on Russian energy exports. Simultaneously, the looming snapback of UN sanctions on Iran adds another layer of supply-side uncertainty, even as Tehran has pledged to continue selling crude to China. Against this backdrop, the geopolitical risk premium is being recalibrated materially higher.

Nonetheless, risks are not one-sided. A recent Dallas Fed survey showed a modest slowdown in U.S. oil and gas activity, highlighting cautious investment sentiment among domestic producers. Broader macroeconomic risks also remain in play, with a cooling U.S. labor market and slowing global growth potentially weighing on fuel demand over the medium term. For now, however, these headwinds are being overshadowed by the immediate supply crunch and geopolitical uncertainty. The balance of risks remains tilted firmly to the upside, leaving oil highly sensitive to any further escalation in Eastern Europe or the Middle East that could disrupt flows and tighten the market further.

Technical Analysis 

USOIL, H4: 

Crude oil (USOIL) is attempting to reclaim higher ground after rebounding sharply from the 62.00 region, with price now challenging resistance near 64.90. The recovery follows a breakout from the recent consolidation phase, supported by strengthening momentum. However, sellers remain active at the current resistance zone, making this level a key battleground for near-term direction.

Momentum indicators are tilting bullish. The RSI has climbed to 66, approaching overbought territory but still showing room for further upside before exhaustion sets in. Meanwhile, the MACD is rising steadily, with widening histogram bars reinforcing growing bullish momentum.

On the downside, initial support sits at 63.20, followed by 61.50 if weakness resumes. A sustained move above 64.90 would open the door for a test of 66.65. Overall, oil is showing signs of recovery, but follow-through above resistance is needed to confirm a shift toward a stronger bullish trend.

Resistance level: 64.90, 66.65

Support level: 63.20, 61.50