Crude oil prices traded marginally lower on Friday, as a stronger US dollar exerted downward pressure on the commodity. Nonetheless, the two leading benchmarks stayed above the psychological $80 per barrel mark, on better demand forecasts by leading energy entities. WTI traded at $80.77 (-0.29%0, while Brent crude was down by 0.20% and traded at $84.90 per barrel at the time of writing.
The global demand outlook for oil improved this week, with three leading bodies indicating better prospects. OPEC+ stuck to its bullish forecast for 2024, keeping the growth in daily demand at 2.25 million barrels. Furthermore, the oil cartel revealed that its members had in fact raised daily production by 203,00 barrels in February, choosing to forego the voluntary cuts policy in place.
Elsewhere, the EIA reported a forecast-beating decline in US crude oil inventories for the week ended March 8, cementing a strong demand side. The latest support for demand growth came from International Energy Agency (IEA) monthly report released on Thursday. The agency had in its previous report forecast a decline in the daily demand for crude oil, but reversed its forecast in the latest report. The IEA now estimates that daily demand will grow by 1.3 million barrels, up from the previous figure of 1.2 million.
Crude oil price may also benefit from the geopolitical front whereby there has been a recent increase in Ukrainian drone attacks on Russian oil infrastructure. This, already accounted for a 1.5% decline in supply in February, which could worsen if the trend continues. Also, the Middle Eastern conflict shows no signs of cooling down soon, after Israel downplayed chances of a ceasefire on Friday, stating that Hamas still held “unrealistic demands.”
The US dollar has strengthened since Thursday, with the DXY reaching its highest level for the week at 103.48. This will exert downward pressure on dollar-denominated crude oil heading into the weekend.
Technical analysis
WTI crude oil needs to stay above the intraday support at $80.50 to sustain the upside. If the buyers keep the price above that level, the commodity could break the next resistance at $81.60, and push toward $82.00. However, action below $80.50 will swing the momentum to favour the sellers. That could see the price break below the $79.90 support. Extended control by the bears could see the price test $79.40.
