Crude oil price held near their lowest in two weeks on Wednesday, a day after OPEC downgraded its forecast for global oil demand growth in 2024 and 2025 and amid demand concerns in China.
However, Crude oil price rebounded slightly before the closing on short-covering a day after they fell near a two-week low on OPEC’s reduced demand forecast, but gains were limited as the dollar hit a seven-month high.
Brent crude futures settled up 0.5%, to $72.28 a barrel. U.S. West Texas Intermediate crude (WTI) futures gained 0.5%, to $68.43. MCX Crude oil up 0.35% at 5796.
On Tuesday, the benchmarks closed at their lowest level in nearly two weeks after the Organization of the Petroleum Exporting Countries lowered its global oil demand growth forecasts for 2024 and 2025, citing weak demand in China, India, and other regions. It was the producer group’s fourth straight downward revision for 2024.
Both U.S. and global oil production are set to rise to slightly larger record highs this year than prior forecasts, the U.S. Energy Information Administration said. U.S. oil output is now expected to average 13.23 million barrels per day (bpd) this year and global production is set to reach 102.6 million bpd.
The International Energy Agency, which has a much lower demand growth forecast than OPEC’s, is set to publish its updated estimate on Thursday.
Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman have underscored the importance of continuing a “close coordination” within OPEC+ during a phone call on Wednesday, also providing some support. On the supply side, markets could still face disruption from Iran or further conflict between Iran and Israel.
Trump’s expected pick for secretary of state, Senator Marco Rubio, could be bullish for prices as his hawkish view on Iran could see sanctions enforced, potentially removing 1.3 million bpd from global supply, said Panmure Liberum’s Ashley Kelty.
Iran’s oil minister said Tehran had made plans to sustain oil production and exports and was ready for possible oil curbs by the U.S., the ministry’s news website Shana reported.
Limiting oil price gains, the dollar advanced to near a seven-month high against major currencies after data showed U.S. inflation for October increased in line with expectations, suggesting the Federal Reserve will keep cutting rates.
A stronger greenback makes dollar-denominated oil more expensive for holders of other currencies, which can reduce demand. U.S. crude stocks fell by 777,000 barrels last week, market sources said, citing American Petroleum Institute figures on Wednesday.
Today, EIA invitatory data is expect to decide intraday momentum.
Technical Outlook – Crude Oil Price
Since 7 November, Crude oil prices retreated from a high of 6138, and made a low of 5759 yesterday. Prices settled at 5796 compared to the previous day’s close of 5776.
In the chart above, prices appear to be forming a Head & Shoulders pattern, suggesting a significant move may be on the horizon. However, this pattern is not yet fully confirmed, as prices continue to trade above the neckline support level.
Further, yesterday, prices action resulted in a formation of an long legged doji candle stick which is signifies indecision in the market, as both buyers and sellers pushed the price in opposite directions, but neither side could gain full control.
Hence, watch a decisive break below 5720 for further selling pressure. A break below is expected to drive prices down to the 5620-5467 range.
Conversely, if prices hold above this level, we may see a reversal with an upside target towards 5890-6088.
Until then, Happy Trading!
Commodity Samachar Securities
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