Oil prices react to EU sanctions and global demand fears

Crude oil prices experienced an uptick on Friday, fueled by speculations of impending European Union sanctions against Russia. Meanwhile, the US dollar faced a decline, displaying a form of correlation.

While Friday’s trading witnessed a marginal increase, oil prices are on course for their fourth consecutive weekly downturn after touching a four-month low on Thursday.

The recent downtrend in oil prices stems from concerns surrounding global crude demand and a significant surge in US stockpiles.

Despite reports from OPEC and the International Energy Agency pointing to a supply shortage in Q4, recent global economic data suggests a demand shortfall.

JPMorgan’s data, tracking worldwide oil demand, indicates an average demand of 101.6 million barrels per day in the first half of this month, falling short by 200,000 barrels per day compared to expectations.

In terms of pricing, Brent crude futures saw a modest uptick of approximately 0.14%, reaching $77.53 per barrel.

Similarly, US crude futures registered a 0.14% increase, settling at $73 per barrel.

As oil prices brace for forthcoming volatility, recent declines are attributed to an unexpected build-up in US crude inventories. This unforeseen surge in supply, countering the production cuts from Saudi Arabia and Russia, challenges the sustainability of Brent crude futures above the $80 threshold.

Conversely, traders observe a support base forming around the $74.00 level, acting as a final fortress before venturing toward the $70.00 level or below. As this zone is approached, market participants factor in the risk of abrupt OPEC+ intervention to propel oil prices higher once again.