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WTI Crude Oil Hovers Near $70.50 Amid Supply Concerns and Demand Optimism

WTI Crude Oil Steady at $70.50 Amid Supply Risks and Demand Optimism

WTI Crude Oil Hovers Near $70.50 Amid Supply Concerns and Demand Optimism

West Texas Intermediate (WTI) crude oil prices eased slightly after recent gains, trading around $70.50 per barrel during Monday’s Asian session. The pullback comes as markets digest growing supply threats and potential demand boosts, setting the stage for possible upside momentum in the near term.

Supply Concerns Drive Price Support

WTI’s recent strength stems from rising concerns over tighter global supplies. The United States is considering additional sanctions targeting “dark fleet” tankers—vessels used to transport oil covertly—and may extend sanctions to Chinese banks to restrict Russia’s oil revenues. These measures, announced by US Treasury Secretary Janet Yellen, aim to curtail Russia’s funding for its military efforts in Ukraine.

Additionally, sanctions on Iran continue to limit its oil exports, exacerbating fears of a constrained global supply outlook.

China’s Stimulus Optimism Boosts Demand Prospects

Expectations of increased demand from China, the world’s largest oil importer, are also supporting crude prices. Under President Xi Jinping’s leadership, China is preparing to raise its fiscal deficit target next year, with a focus on stimulating consumption to counter external pressures, including looming 10% US tariffs on Chinese exports. These fiscal measures are expected to spur economic growth, potentially driving higher oil demand.

Improved Sentiment from Global Central Bank Actions

WTI prices are also benefiting from improved market sentiment following recent rate cuts by central banks in Canada, Europe, and Switzerland. These moves signal a shift toward more accommodative monetary policies, which could stimulate global economic activity and support energy demand.

The upcoming Federal Reserve (Fed) policy decision on Wednesday is another key focus. A widely anticipated 25-basis-point rate cut is expected to further boost economic growth by lowering borrowing costs, potentially driving higher demand for crude oil.

Outlook and Key Levels

  • Support: Immediate support lies near $70.00 per barrel, followed by the $69.50 region. A break below these levels could lead to further downside toward $68.00.
  • Resistance: On the upside, WTI faces resistance near $71.50. A move above this level could pave the way for a retest of $73.00, with further gains contingent on market developments and geopolitical factors.

Market Focus

In the near term, crude oil traders will closely monitor developments surrounding US sanctions, China’s economic policies, and Wednesday’s FOMC decision. These factors, combined with evolving geopolitical risks, are likely to shape WTI’s price trajectory in the coming days.