Oil Prices set for weekly loss amid weaker demand signals
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Crude oil prices remain under pressure, with Brent crude trading at $71.63 per barrel and WTI at $67.82, primarily due to concerns about weak demand in China. Despite an upward revision of the 2023 demand growth forecast by the International Energy Agency (IEA), long-term projections, a stronger US Dollar, and signs of softening demand have weighed on market sentiment.
China’s Demand Slowdown Pressures Prices
In October, China’s refining activity dropped 4.6%, marking the seventh consecutive month of declining demand. This has been exacerbated by temporary refinery shutdowns and reduced output from independent refiners, affecting the world’s largest oil importer. While the IEA revised its 2023 demand growth forecast upward to 920,000 barrels per day (bpd), it lowered its 2025 demand growth projection to 990,000 bpd. OPEC also reduced its demand outlook, though its 2024 forecast of 1.82 million bpd remains higher than the IEA’s.
Inventory Data and Strong US Dollar Weigh on Prices
The latest US Energy Information Administration (EIA) report revealed mixed inventory data. Crude oil inventories rose by 2.1 million barrels, pressuring prices lower. Although gasoline stocks fell by 4.4 million barrels and distillate inventories dropped by 1.4 million barrels, these bullish signals were largely overlooked by traders. Additionally, a stronger US Dollar, driven by political uncertainty following the US elections, has put further pressure on oil prices. The rising Dollar makes crude, priced in USD, more expensive for international buyers, dampening global demand.
Technical Outlook
Brent Crude: Support at $70.00, resistance at $73.50.
WTI Crude: Support at $65.00, resistance at $69.00.
Strategies for Traders
Short Opportunities: Given persistent bearish sentiment and weaker demand forecasts, traders may target short positions around $70.00 for Brent and $65.00 for WTI.
Range Trading: Prices may consolidate between key support and resistance levels, providing opportunities for range-bound trades. Prices may consolidate between key support and resistance levels, providing opportunities for range-bound trades.
Long-Term Pivots: Monitor developments from OPEC+ meetings and geopolitical events that could trigger a price recovery.
Oil prices face ongoing pressure from weak demand signals, rising inventories, and a stronger US Dollar. While the short-term outlook remains bearish, traders should stay vigilant for market-moving events, such as changes in OPEC+ policies or global economic shifts, which could influence price movements.
China’s Demand Slowdown Pressures Prices
In October, China’s refining activity dropped 4.6%, marking the seventh consecutive month of declining demand. This has been exacerbated by temporary refinery shutdowns and reduced output from independent refiners, affecting the world’s largest oil importer. While the IEA revised its 2023 demand growth forecast upward to 920,000 barrels per day (bpd), it lowered its 2025 demand growth projection to 990,000 bpd. OPEC also reduced its demand outlook, though its 2024 forecast of 1.82 million bpd remains higher than the IEA’s.
Inventory Data and Strong US Dollar Weigh on Prices
The latest US Energy Information Administration (EIA) report revealed mixed inventory data. Crude oil inventories rose by 2.1 million barrels, pressuring prices lower. Although gasoline stocks fell by 4.4 million barrels and distillate inventories dropped by 1.4 million barrels, these bullish signals were largely overlooked by traders. Additionally, a stronger US Dollar, driven by political uncertainty following the US elections, has put further pressure on oil prices. The rising Dollar makes crude, priced in USD, more expensive for international buyers, dampening global demand.
Technical Outlook
Brent Crude: Support at $70.00, resistance at $73.50.
WTI Crude: Support at $65.00, resistance at $69.00.
Strategies for Traders
Short Opportunities: Given persistent bearish sentiment and weaker demand forecasts, traders may target short positions around $70.00 for Brent and $65.00 for WTI.
Range Trading: Prices may consolidate between key support and resistance levels, providing opportunities for range-bound trades. Prices may consolidate between key support and resistance levels, providing opportunities for range-bound trades.
Long-Term Pivots: Monitor developments from OPEC+ meetings and geopolitical events that could trigger a price recovery.
Oil prices face ongoing pressure from weak demand signals, rising inventories, and a stronger US Dollar. While the short-term outlook remains bearish, traders should stay vigilant for market-moving events, such as changes in OPEC+ policies or global economic shifts, which could influence price movements.