Crude oil prices rise as worries about interruptions in global supply grow

As geopolitical tensions in the Middle East escalate, especially in light of the Houthi attacks on ships in the Red Sea, crude oil prices saw a little increase of 0.11%, ultimately settling at 6174. This increase was fueled by mounting concerns about interruptions to global supply. The U.S. government intends to buy an extra 2.1 million barrels of oil to replenish strategic reserves, bringing the total government purchases to 11 million barrels.

This news from the Energy Information Administration (EIA) significantly improved market confidence. The API’s Weekly Statistical Bulletin, however, revealed that U.S. crude oil stocks rose by 0.939 million barrels in the week ending December 15, 2023, after declining by 2.349 million barrels the previous week and against market estimates of a fall of 2.233 million barrels.

In addition, it is anticipated that the top shale-producing regions of the United States will produce less oil in January than in December, with an estimated 9.692 million barrels per day (bpd) falling for the third consecutive month.

Through a 4.81% decline in open interest to close at 12802, the market is technically going through short covering right now. With resistance most likely at 6256 and a possible upward rise to 6337, crude oil is finding support at 6127, and a breach there might test 6079.

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