Oil Price Forecast: Supply Drop, Fed Pause, and Venezuela Deal Drive Prices Higher

Group 1: Oil Market Dynamics - Gasoline stocks increased by 200,000 barrels while distillate stocks rose by 300,000 barrels, indicating a shift in refinery output potentially due to changing demand [1] - Gasoline production surged to 9.6 million barrels per day, whereas distillate production declined to 4.8 million barrels, highlighting an imbalance in the market [1] Group 2: Federal Reserve Impact - The Federal Reserve maintained interest rates at 3.50%–3.75%, pausing after three cuts last year due to persistent inflation and slowing job growth, which indirectly supported the oil market [2] - The stabilization of the U.S. dollar due to the Fed's cautious stance, combined with ongoing inflation fears, has added rate premiums to oil prices [3] Group 3: Geopolitical Factors - Citgo's purchase of Venezuelan oil marks a significant development, as it is the first deal since 2019, following a U.S.-Venezuela agreement after political changes in Venezuela [4] - The delivery of approximately 500,000 barrels of heavy crude arranged through Trafigura indicates a re-entry of Venezuelan oil into the market, which could alter global supply dynamics [5] - Citgo refineries are specifically designed for heavy crude processing, suggesting that this shift may complicate global supply flows in the near future [5]