Crude oil
Image courtesy of Getty Images

Crude Oil Market Aims Higher as Tailwinds Converge

By:Thomas Westwater

Oil prices rise to $80 per barrel level

  • Oil price challenge $80/barrel as bullish factors converge.
  • The EIA report shows bullish product drawdowns that surprised analysts.
  • Backdrop supports oil prices in $81-$84 range Friday’s NFP poses risk.

Crude oil futures (/CLJ4) challenged the $80/barrel level on Wednesday as bullish tailwinds converged to aid the commodity’s ascent, which has been in place since early February.

With prices up nearly 20% since then, you’d expect there to be some consolidation before moving higher, but recent developments have helped strengthen the case for the move to continue.

EIA report shows bullish product draws

One of those developments was today’s inventory numbers from the Energy Information Administration (EIA). The inventory report for the week ending March 1 showed a smaller-than-expected build for crude oil stocks at +1.37 million versus an expected +2.12 million barrels.

The products side was even more bullish and draws from that area are sometimes more predictive of higher oil prices than oil draws. That is because product draws can lead to crude inventory draws since refiners use oil to make gasoline, diesel, and other oil-derived products.

The EIA report showed a 4.46 million withdrawal in gasoline stocks, which was much deeper than the -1.64 million consensuses forecast. Distillates showed similar behavior, drawing 4.13 million versus an expected -665k barrels. The product draws should help support the broader equity-based energy sector.

OPEC and Saudi Arabia add to bullish tailwinds

Earlier this week, Saudi Aramco, Saudi Arabia’s state-owned petroleum company, lifted its official selling price (OSP) for its Arab light crude to Asia. The April delivery price was set at $1.70 over the Platts Dubai/Oman benchmark after being +$1.50 per barrel in February and March.

The move follows a decision from the Organization of the Petroleum Exporting Countries (OPEC) to extend its production cuts into the second quarter of this year. While the decision was expected and even disappointed some who were calling for longer cuts to extend through the end of the year, it should help to underpin the bullish supply side of the market.

Global backdrop remains supportive

Meanwhile, there are reasons to be optimistic about the demand side. China recently unveiled its growth target for the year, setting it at 5%.

Policymakers followed it up by hinting at possible stimulus measures it could take to help support that goal, including cutting the reserve requirement ratio (RRR) for the nation’s banks. At the same time, the United States is expected to see some rate cuts as soon as June from the Federal Reserve, with Fed funds futures pricing in a 53% chance for a June cut. That should help support an already resilient economy.

Overall, crude oil prices should have the supportive backdrop to rise to about the $81-$84 per barrel range over the next week. However, one thing to watch out for is Friday’s U.S. jobs report. If the report’s headline figure comes in over expectations (+200k), it could push rate cut odds to the right, which would likely hurt oil prices.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.