WTI crude was up $2.89, or 4.63%, through Thursday’s close, trading at $65.29 — the highest level since early September. The move was driven by a repricing of near-term supply risk, after traders began unwinding positions built on expectations for the resumption of Kurdish oil exports. Roughly 230,000 barrels per day (bpd) were expected to restart through Turkey, but the deal fell apart when producers demanded payment guarantees before allowing flows to resume.
With those barrels still offline, the market quickly reversed course. Shorts were squeezed early in the week, and follow-through buying helped sustain the move. Traders had been leaning into the restart for weeks — and when it didn’t materialize, they were caught wrong-footed.
Chevron Cuts Venezuelan Flows Over U.S. Permitting Hurdles
News that Chevron reduced crude exports from Venezuela due to U.S. permit issues added another layer of supply concern. While Venezuelan volumes are relatively small, they’ve become increasingly important to refiners on the U.S. Gulf Coast seeking heavier, sour grades.
With Chevron’s shipments disrupted, refiners were forced back into the physical market, where sour barrels remain tight. The interruption further narrowed supply options at a time when traders were already repositioning for lost flow out of Iraq. It was another driver that pushed prompt contracts higher into midweek.
Russia Curbs Diesel Exports After Drone Attacks on Fuel Infrastructure
Russia’s…
WTI crude was up $2.89, or 4.63%, through Thursday’s close, trading at $65.29 — the highest level since early September. The move was driven by a repricing of near-term supply risk, after traders began unwinding positions built on expectations for the resumption of Kurdish oil exports. Roughly 230,000 barrels per day (bpd) were expected to restart through Turkey, but the deal fell apart when producers demanded payment guarantees before allowing flows to resume.
With those barrels still offline, the market quickly reversed course. Shorts were squeezed early in the week, and follow-through buying helped sustain the move. Traders had been leaning into the restart for weeks — and when it didn’t materialize, they were caught wrong-footed.
Chevron Cuts Venezuelan Flows Over U.S. Permitting Hurdles
News that Chevron reduced crude exports from Venezuela due to U.S. permit issues added another layer of supply concern. While Venezuelan volumes are relatively small, they’ve become increasingly important to refiners on the U.S. Gulf Coast seeking heavier, sour grades.
With Chevron’s shipments disrupted, refiners were forced back into the physical market, where sour barrels remain tight. The interruption further narrowed supply options at a time when traders were already repositioning for lost flow out of Iraq. It was another driver that pushed prompt contracts higher into midweek.
Russia Curbs Diesel Exports After Drone Attacks on Fuel Infrastructure
Russia’s decision to impose a partial ban on diesel exports and extend existing gasoline export restrictions added further support. The move came after Ukrainian drone attacks hit Russian fuel depots in Bryansk and Samara, damaging infrastructure and prompting Moscow to restrict outbound product shipments through year-end.
Russia supplies more than 1 million bpd of diesel to global markets. The announcement immediately tightened middle distillate balances, especially in Europe, and supported cracks across the board. Traders began pricing in higher refined product risk premiums, with limited near-term alternatives to offset the lost Russian volumes.
EIA Data Confirms Tighter Domestic Balance
The U.S. Energy Information Administration reported a 607,000-barrel draw in crude inventories for the week ending September 19. That surprised traders who had expected a modest build of around 235,000 barrels. Gasoline and distillate stocks also fell, pointing to tighter balances across the refined barrel.
Some desks flagged early signs of demand softness. J.P. Morgan noted weaker gasoline consumption tied to cooling travel activity, and the Dallas Fed reported lower oil and gas activity in Texas, Louisiana, and New Mexico in Q3. Still, the drawdown in inventories kept the focus on the supply side, and helped confirm the physical tightness seen earlier in the week.
GDP Beat and Fed Caution Pressure Broader Risk Sentiment
A revised U.S. GDP figure of 3.8% for the prior quarter pushed back against expectations for further Federal Reserve rate cuts. Fed Chair Jerome Powell added to the cautious tone with comments suggesting asset prices may have run ahead of fundamentals. Equities dropped, and broader risk sentiment weakened going into Thursday afternoon.
Despite the pressure across financial markets, crude held its gains. UBS and other analysts noted that crude was largely decoupled from rate policy chatter this week, with traders focusing on barrels, not bond yields. Rate headlines took a back seat to real-time supply constraints.
Geopolitical Risk Premium Remains Elevated
Additional support came from renewed geopolitical tensions in Europe and the Middle East. Russian strikes near the Polish border prompted a NATO response, including scrambled fighter jets, while Estonia and Germany reported airspace violations. The United Nations held an emergency meeting to address the situation.
In the Middle East, Israel responded sharply to the recognition of a Palestinian state by four Western countries — raising concerns about further instability in a region that includes several major oil exporters. While no oil infrastructure has been directly affected, traders added back geopolitical risk premium as conflict headlines picked up.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
Light crude oil futures are trading on the strong side of the 52-week moving average at $63.18 and the bullish side of the long-term pivot at $64.21. This is helping to create this week’s price surge. Both levels are now support.
Swing traders are now targeting the swing top at $65.68. A trade through this level will reaffirm the shift in momentum to the upside with preliminary targets a pivot at $68.35 and a main top at $69.34. The latter is a potential trigger point for an acceleration to the upside.
On the downside, under the 52-week moving average is a 50% to 61.8% support zone at $62.97 and $59.91, respectively. Buyers have been respecting this area since the week-ending August 15.
Continue to monitor the 52-week moving average for guidance. Based on current activity, we should go into next week with a bullish bias since we are well-above this key directional indicator.
Weekly Technical Forecast
The direction of the Weekly Light Crude Oil Futures market the week ending October 3 is likely to be determined by trader reaction to the 52-week moving average at $63.18.
Bullish Scenario
A sustained move over $63.18 will signal the presence of buyers. If this creates enough upside momentum, we could see a breakout over $65.68. As trading ranges expand due to stronger buying and less resistance, we could see a drive into $68.35 and $69.34. Taking out the latter with conviction could put $75.92 on the radar.
Bearish Scenario
A sustained move under the 52-week moving average at $63.18 will indicate the return of sellers. This could lead to a quick test of the minor bottom at $60.77, followed by Fibonacci support at $59.91. The latter is a potential trigger point for an acceleration to the downside. $55.74 is the next target.
Outlook: Crude Remains Supported by Supply Risk, Despite Softer Demand Signals
As of Thursday, the crude oil market remains well supported by unresolved supply issues tied to Iraq, Venezuela, and Russia. Physical tightness, particularly in diesel, continues to outweigh concerns about slowing demand and tighter financial conditions. The EIA data confirmed that U.S. inventories remain under pressure, even as travel demand eases and refinery activity slows into Q4.
Looking ahead, the next major test will be whether Kurdish exports actually resume — and how much diesel Russia keeps off the market. Unless either of those barrels return in size, traders are likely to continue buying dips. Supply, not sentiment, remains the driver.
Technically, crossing to the strong side of the 52-week moving average at $63.18 has given the market solid long-term support with the rally likely to expand as buyers chew through widely placed resistance levels.
Look for buyers to go after $65.68 early in the week. If successful, look for the rally to expand into at least $69.34.
On the downside, the 52-week moving average sets the tone.
