Oil prices rallied today adding to gains made since the beginning of the week. Front-month WTI is now up over 6.5% from its low on Monday while Brent is up 4%. Israel rejected Hamas’s latest ceasefire deal and has begun an offensive on the southern border city of Rafah. Despite this, talks are continuing. Both WTI and Brent are back above resistance at $75 and $80 respectively. But whether they will build on these gains or pull back as they did at the end of January remains to be seen. Overall, there’s been no change in the fundamental dynamics. Discussions over a proposed ceasefire between Israel and Hamas are ongoing, and Iranian-backed Houthis continue to aim missiles and drones at shipping in the Red Sea. There’s no end in sight to the war between Ukraine and Russia, and it's developments there which currently have the greatest potential to move oil prices. Concerns over the Chinese economy suggest that demand could fall this year, while supply should remain plentiful. For now, the supply of crude oil remains plentiful, while the 2024 demand outlook remains uncertain. Recently the US Energy Information Administration (EIA) released its short-term energy outlook. The EIA forecasts that US production will be steady at 13.3 million barrels per day (bpd) for the next twelve months. This helped to steady prices as it indicates no increase from the record output of last December. Occidental’s CEO Vicki Hollub predicts a supply shortage in crude oil by the end of 2025 as countries are failing to replenish reserves fast enough. Forecasts suggest that demand will outstrip supply by a large margin. But it’s worth considering that OPEC+ could reverse current supply cuts and even raise production in response.