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A weaker U.S. dollar is also contributing to gains, making crude more attractive to global buyers. The dollar has been in a downtrend since late February, and traders are pricing in the possibility of a Federal Reserve rate cut by year-end, which could further support oil prices.
Geopolitical Tensions and OPEC+ Production Policy in Focus
Geopolitical risks continue to influence market sentiment. Israel has resumed military operations in Gaza, raising concerns over regional stability, while U.S. airstrikes on Houthi targets in Yemen add to supply-side uncertainties. Additionally, markets are monitoring U.S.-Iran tensions, with potential implications for global crude flows.
On the supply side, OPEC+ remains a key factor. While the group has been curbing production to stabilize prices, traders are cautious about an expected output increase that could cap gains. Market participants are also watching economic data, including the upcoming U.S. S&P Global Services PMI, which could signal broader economic trends affecting demand.
China’s Oil Demand Forecasts vs. Reality
China’s oil demand remains a crucial driver for crude markets, but recent data highlights a disconnect between agency forecasts and actual import trends. OPEC estimates Chinese oil demand at 16.68 million barrels per day (bpd), up 320,000 bpd from last year. However, China’s crude imports have fallen 2.1% year-over-year to 11.04 million bpd.
This discrepancy suggests that while demand projections remain bullish, actual market conditions are less supportive. Lower crude imports indicate potential inventory buildup rather than outright consumption growth, casting doubt on the strength of China’s role in driving global oil prices higher.
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