Is another oil price collapse approaching?
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Is another oil price collapse approaching?
Despite a slight recovery in oil prices, prices still remain down 10 percent from last quarter.
On Monday, WTI crude oil futures topped $70 a barrel, registering a 1.4 percent increase from the previous week. This was mainly due to oil infrastructure disruptions in the U.S. Gulf and expectations of lower interest rates in the United States. As a result, nearly 20 percent of oil production in the Gulf of Mexico remains offline due to Hurricane Francine. In addition, investors are betting on a Federal Reserve rate cut of 50 percentage points to stimulate the economy and increase demand for oil. However, concerns persist about slowing demand after Chinese data showed the longest phase of industrial decline since 2021, with lower-than-expected investment and doubts about whether China's growth target will be met.
In Libya, oil exports declined significantly due to the impasse in UN-led talks on central bank management. The EIA provides valuable data on global oil supply, with some information that may be eluding markets. For example, global crude oil production peaked in November 2018 at 84.6 million barrels per day. In May of this year, world production declined to 81 million barrels per day. This indicates a slowdown in supply, and data on the number of Baker Hughes (BKR) oil rigs suggest that drilling activity in the United States is gradually declining.
This may be good news, but the main problem is the declining demand for oil.
Slowing economic growth globally has reduced oil demand, as evidenced by OPEC's consumption review. In particular, China-the world's largest consumer of crude oil-has been affected by the crisis in the real estate sector and the transition to cleaner energy sources such as LNG and electric vehicles. At the same time, the United States has seen an increase in oil exports due to its growing production capacity, putting bearish pressure on global prices and offsetting the production cuts decided by OPEC.
Using technical analysis, we can assume that the price of crude oil will reach $72, which is a resistance zone, before a possible new downward movement.
We anticipate possible weakness in oil prices in the next quarter due to unstable demand around $60. However, a change in OPEC policy could avoid this situation, with a significant cut in production. We will pay attention to the development of news on this issue.
We look forward to seeing you in the next article! And remember, for successful trading always rely on TRADINGVIEW: an indispensable tool that can help you avoid serious mistakes during your trades.
Translated with DeepL.com (free version)
Is another oil price collapse approaching?
Despite a slight recovery in oil prices, prices still remain down 10 percent from last quarter.
On Monday, WTI crude oil futures topped $70 a barrel, registering a 1.4 percent increase from the previous week. This was mainly due to oil infrastructure disruptions in the U.S. Gulf and expectations of lower interest rates in the United States. As a result, nearly 20 percent of oil production in the Gulf of Mexico remains offline due to Hurricane Francine. In addition, investors are betting on a Federal Reserve rate cut of 50 percentage points to stimulate the economy and increase demand for oil. However, concerns persist about slowing demand after Chinese data showed the longest phase of industrial decline since 2021, with lower-than-expected investment and doubts about whether China's growth target will be met.
In Libya, oil exports declined significantly due to the impasse in UN-led talks on central bank management. The EIA provides valuable data on global oil supply, with some information that may be eluding markets. For example, global crude oil production peaked in November 2018 at 84.6 million barrels per day. In May of this year, world production declined to 81 million barrels per day. This indicates a slowdown in supply, and data on the number of Baker Hughes (BKR) oil rigs suggest that drilling activity in the United States is gradually declining.
This may be good news, but the main problem is the declining demand for oil.
Slowing economic growth globally has reduced oil demand, as evidenced by OPEC's consumption review. In particular, China-the world's largest consumer of crude oil-has been affected by the crisis in the real estate sector and the transition to cleaner energy sources such as LNG and electric vehicles. At the same time, the United States has seen an increase in oil exports due to its growing production capacity, putting bearish pressure on global prices and offsetting the production cuts decided by OPEC.
Using technical analysis, we can assume that the price of crude oil will reach $72, which is a resistance zone, before a possible new downward movement.
We anticipate possible weakness in oil prices in the next quarter due to unstable demand around $60. However, a change in OPEC policy could avoid this situation, with a significant cut in production. We will pay attention to the development of news on this issue.
We look forward to seeing you in the next article! And remember, for successful trading always rely on TRADINGVIEW: an indispensable tool that can help you avoid serious mistakes during your trades.
Translated with DeepL.com (free version)
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