Harvest Global Markets :

The international benchmark Brent and U.S. benchmark WTI crude oil prices have been facing challenges, with both hovering near three-month lows. These struggles are primarily driven by concerns about demand in the U.S. and China. Despite a modest increase, Brent crude’s rise to $81.76 per barrel has been overshadowed by the dip in U.S. crude prices to $77.35. The markets are adjusting to a potential shift from fears of disruptions in Middle Eastern oil supply to a more balanced supply-demand situation.

One significant factor impacting these oil prices is the recent data from the American Petroleum Institute (API), which revealed a substantial increase in U.S. crude oil inventories, surging by nearly 12 million barrels. This hints at a changing dynamic in the oil market. Additionally, the Energy Information Administration (EIA) has postponed its inventory report but indicated a downward revision in U.S. production and consumption forecasts. This, along with the expectation of increased Venezuelan oil output due to sanction relaxations, suggests a less tight supply scenario than previously feared.

Global economic indicators are also influencing market sentiment. China’s crude oil imports have increased while its exports have contracted, raising concerns about global demand. Furthermore, the rebound of the U.S. dollar is adding cost pressures for non-dollar currencies, which further complicates the demand picture. However, OPEC maintains a positive outlook, expecting global economic growth to drive oil demand despite these macroeconomic challenges.

On a positive note, OPEC’s confidence in global economic growth provides some support to the market. Additionally, China’s central bank governor expressing confidence in achieving GDP growth targets indicates the potential for increased demand from the world’s largest oil importer, offering a glimmer of hope amid the bearish sentiment in oil markets. In the short term, the outlook for oil prices appears bearish. Factors such as growing U.S. oil inventories, revised demand projections, and a stronger U.S. dollar are contributing to a cautious view for oil prices.

From a technical analysis perspective, the daily price of light crude oil futures, currently at $77.30, suggests a slight bearish inclination. It is trading below both the 200-day and 50-day moving averages, indicating potential bearish momentum over medium and long-term horizons. The identical values for minor support and resistance levels suggest a pivotal moment for the market, with the potential for a decisive move away from the pivot point of $77.43 to establish the next trend direction. Overall, the positioning below key moving averages and the pivot-like behavior around minor support and resistance levels point toward a bearish market sentiment for light crude oil futures.