Crude Oil prices declined slightly, trading at $82.53, down 0.08% on Wednesday, influenced by a strengthening dollar that lessened the appeal of oil investments.

This downturn comes after oil benchmarks achieved their highest valuations in several months, driven by optimistic demand forecasts and diminishing supply.

Dollar Strength Impacts Oil Market

Tina Teng, an independent analyst from Auckland, attributed the day’s losses to profit-taking, underscoring the rally’s foundation on an improved demand outlook and signs of shrinking supply. The consecutive rise in the U.S. dollar index, marking its fifth session of gains, underscored the robustness of the U.S. economy, subsequently making oil more costly for investors using other currencies and reducing demand.

Anticipation of Federal Reserve’s Decision

Market participants are keenly awaiting the Federal Reserve’s interest rate announcement, seeking insights into its future rate trajectory. The anticipation builds against the backdrop of Brent and WTI reaching late October highs, spurred by the geopolitical tensions following Ukrainian drone attacks on Russian refineries.

Geopolitical Tensions Tighten Supply

Analysts at ING, including Warren Patterson, highlight the supportive backdrop provided by supply risks associated with Russian refined products, especially as OPEC+ extends its voluntary production cuts into the second quarter of 2024. The strikes on Russian refining capabilities have prompted an uptick in the country’s crude oil exports, potentially leading to supply adjustments if these disruptions persist.

These developments, alongside the latest inventory reports from the American Petroleum Institute indicating a decrease in U.S. crude oil and gasoline stockpiles, suggest a complex and evolving landscape for the Crude Oil price forecast and USOIL SD price, with refined products possibly facing immediate bullish pressures.

WTI Crude Oil Price Forecast: Technical Outlook