Oil price volatility rises, supported by API data, but weak demand caps further gains.

On Tuesday, international oil prices fluctuated. After a significant pullback, they managed to recover some losses, reflecting the complex nature of the market. During the European session, crude prices accelerated downwards as the market reacted to rumors of a possible ceasefire agreement by Hamas, causing further declines in oil prices. However, in the overnight session, oil prices gradually rebounded, reclaiming some of the losses, highlighting the dominant role of technical rebound demand.

As the Federal Reserve's FOMC policy meeting approaches, the overall market remains in a state of observation, and the oil market has not escaped this sentiment. Commodities fell across the board, with oil unable to remain unaffected. Market participants are generally waiting for upcoming economic data and potential major events to further guide the direction of oil prices.

In the early hours, data from the American Petroleum Institute (API) showed that for the week ending December 13, U.S. crude inventories decreased by 4.694 million barrels, exceeding market expectations, providing some support for oil prices. However, it's worth noting that crude oil inventories in the Cushing area rebounded, and refined product inventories also rose, limiting further upward movement in oil prices. Investors are focused on the evening release of the EIA inventory report, hoping to gain more signals about the supply-demand balance in the U.S. crude market.

In terms of the spread, West Texas Intermediate (WTI) crude showed relatively strong performance due to lower inventories, while Brent crude saw a slight decline. Weak demand remains a critical factor limiting the rise in oil prices. On Tuesday, the gasoline crack spread in the United States continued to decline, hitting its lowest level since May 2021. China's refined oil crack spread has also recently fallen, indicating signs of global demand weakness.

Overall, the crude oil market is currently in a low-range oscillation pattern. Although the API crude inventory data exceeded expectations in terms of a decline, providing some support for oil prices, weak demand and high attention from the market towards upcoming economic data and significant events mean that the room for oil price increases is constrained. Against this backdrop, oil prices may continue to consolidate in the short term, and investors should operate with caution and manage risks.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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