Oil News: Possible SPR Refill Calms Price Slide, Bearish Outlook Persists

Strategic Reserve Replenishment - The U.S. government plans to purchase up to 3 million barrels of oil for the Strategic Petroleum Reserve (SPR) with delivery through May 2024, introducing fresh buying interest in the market [1] - This move is viewed as a stabilizing factor following a recent decline, although limited SPR funds necessitate Congressional approval for further purchases [1] - Traders perceive the SPR news as a modest buffer against downside risks, despite prevailing bearish sentiment due to global demand concerns [1] Geopolitical Tensions - Traders are monitoring developments in the Middle East, particularly following Israel's strike on Iran, which did not target Tehran's oil infrastructure [2] - U.S. officials have warned Iran of severe consequences for further escalations, while Iran has indicated it will respond using "all available tools" [2] - Any escalation affecting Iranian oil facilities could lead to price spikes due to supply disruptions, which traders are factoring into short-term risk assessments [2] Demand Concerns - The outlook for oil demand remains subdued due to China's slower-than-expected economic recovery, weak winter kerosene demand, and potentially higher U.S. crude and gasoline inventories [3] - A Reuters poll suggests that U.S. crude and gasoline stockpiles likely increased last week, with upcoming inventory reports expected to confirm weaker demand [3] - The American Petroleum Institute (API) and the Energy Information Administration (EIA) are set to release inventory data that could add pressure to prices if inventory levels rise [3] Political Influences - With the U.S. elections approaching, oil traders are preparing for potential volatility linked to political outcomes [4] - A Trump victory could lead to a short-term rally due to his pro-oil industry stance, but analysts believe any positive reaction would be temporary [4] - The demand outlook is expected to remain the dominant influence on the market, potentially countering any short-term gains [4] Market Forecast - Despite a slight rebound due to the SPR announcement, the broader market trend is bearish [5] - Softening demand forecasts and ongoing geopolitical risks are likely to limit significant price gains [5] - Crude oil prices are expected to remain under pressure, with potential re-testing of recent lows near $65.75, and traders should monitor inventory data and geopolitical events for directional cues [5]