Crude oil futures jumped by almost 1% on Monday as a potential hurricane approaching theU.S. Gulf Coast helped oil prices to recover some of the previous week heavy losses.
Brent crude LCOc1 rose by 0.82%, to $71.64 a barrel while West Texas Intermediate crude futures CLc1 were up 0.9%, at $68.28.
Prices of Brent crude had fallen in each of the past six trading sessions, retreating by more than 11%, or nearly $9 a barrel, to register the lowest closing price since December 2021 on Friday.
Libya& NOC late last week declared force majeure on several crude cargoes loading from the Es Sider port, with oil production curtailed by a political standoff over the central bank and oil revenue.
A weather system in the southwestern Gulf of Mexico is forecast to become a hurricane before it reaches the northwestern U.S. Gulf Coast, the U.S. National Hurricane Center said on Sunday.
The U.S. Gulf Coast accounts for about 60% of U.S. refining capacity. A small recovery in prices is under way this morning, inspired by hurricane warnings that might threaten the U.S. Gulf Coast, but the wider conversation remains on where demand will come from and what OPEC+ can do.
The OPEC+ oil producer group last week agreed to delay a planned output increase of 180,000 barrels per day for October by two months in reaction to tumbling crude prices.
However, sluggish Chinese demand and persistent oversupply, executives told the APPEC conference in Singapore on Monday, will be main hurdle for the crude oil prices.
Meanwhile, Morgan Stanley cut its Brent price forecast for the fourth quarter to $75 a barrel from $80, adding that prices are likely to remain around that level unless demand weakens further.
The weakness in Chinese demand is driven by an economic slowdown and growing shift towards lower-carbon fuels, said speakers at the APPEC energy industry event. Refining margins in Asia have slipped to their lowest seasonal levels since 2020.
A U.S. jobs report on Friday showed that August non-farm payrolls increased by less than market watchers had expected. A decline in the jobless rate could slow the pace at which the Federal Reserve cuts interest rates. Lower interest rates typically increase oil demand by spurring economic growth
Technical Outlook – Crude Oil Price
Crude oil prices stalled their recent drastic fall, and recovered from the low 5667, settled at 5776, up 1.26%.
This was a first gained after 3 September, as prices continued traded under in a pressure from the peak of 6249. Formation of a bullish harami candle stick on the above chart is indicating for a trend reversal in a near future.
A break above 5805 would increase further increase to 5880-5920. Otherwise, a short-term decline to 5720-5700 should attract buying activity.
On the downside, another push below 5620 should emerge for further support at 5520-5575.
Happy trading!
Commodity Samachar Securities
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