USOIL : Weekly Technical Analysis
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Crude oil prices declined on Tuesday due to demand concerns driven by weak economic growth in China, the world's biggest crude importer.
Brent crude fell 1% to US$76.77 per barrel and West Texas Intermediate crude lost 0.1% to US773.50/B at last look early Tuesday. Demand concerns offset impacts of the production and export halt at Libya due to a political dispute, Reuters said in a Tuesday report.
China's purchasing managers' index hit a six-month low in August and new home prices grew in the month at their weakest pace this year.
Meanwhile, Libya's National Oil Corp declared force majeure at its El Feel oil field from Sept. 2. Total production in the country had dropped to just over 591,000 barrels per day (b/d) as of Aug. 28 from nearly 959,000 b/d on Aug. 26, Reuters reported, citing NOC.
However, the Organization of the Petroleum Exporting Countries is reportedly set to proceed with its planned output boost in October regardless of demand concerns, Reuters reported, citing unnamed industry sources.
From a technical point of view, the break of the support (left wing) should confirm our bearish harmonic structure and subsequently push the price around $55. If OPEC confirms an increase in production, this element could support our idea. What do you think?
Crude oil prices declined on Tuesday due to demand concerns driven by weak economic growth in China, the world's biggest crude importer.
Brent crude fell 1% to US$76.77 per barrel and West Texas Intermediate crude lost 0.1% to US773.50/B at last look early Tuesday. Demand concerns offset impacts of the production and export halt at Libya due to a political dispute, Reuters said in a Tuesday report.
China's purchasing managers' index hit a six-month low in August and new home prices grew in the month at their weakest pace this year.
Meanwhile, Libya's National Oil Corp declared force majeure at its El Feel oil field from Sept. 2. Total production in the country had dropped to just over 591,000 barrels per day (b/d) as of Aug. 28 from nearly 959,000 b/d on Aug. 26, Reuters reported, citing NOC.
However, the Organization of the Petroleum Exporting Countries is reportedly set to proceed with its planned output boost in October regardless of demand concerns, Reuters reported, citing unnamed industry sources.
From a technical point of view, the break of the support (left wing) should confirm our bearish harmonic structure and subsequently push the price around $55. If OPEC confirms an increase in production, this element could support our idea. What do you think?
Note
Oil prices weakened for a second-straight session early on Tuesday as further weak economic data from China, the end of the U.S. summer driving season and next month's likely return of some shut-in supply from OPEC offset falling supply from Libya. West Texas Intermediate crude for October delivery was last seen down US$0.74 to US$72.81 per barrel, while November Brent crude, the global benchmark, was down US$1.43 to US$76.09.
China, the No.1 importer, on Monday reported its manufacturing sector contracted in July and exports fell as its economy continues to slow. The news comes as the U.S. driving season ended with the Labor Day weekend while OPEC is scheduled to begin returning 2.2-million barrels per day of voluntary cuts to the market beginning in October, depending on market conditions. The cartel is slated to return 83,000 barrels per day monthly for the fourth quarter.
"We could make the case that the prudent course of action would be to wait for December before hitting the play button on the taper given the resurgent demand concerns. While the APAC region was supposed to carry a majority of the growth this year, China's underperformance has dented 2024 growth projections and has continued to trail both 2023 crude import and refinery throughput levels," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, noted.
Support for prices is coming as supply from Libya remains withheld amid a dispute between the North African country's two competing governments over control of its central bank. Reuters reported the exports from Libya's ports are suspended, with production for some fields shut in. The news agency said production fell to 591,000 barrel per day last week, down from 1.28-million bpd in July.
Note
Reached support area (intraday) around $ 70
Note
This week's oil-price slump adds further pressure on OPEC+'s plans to unwind some of its production curbs, according to ING's Warren Patterson and Ewa Manthey. OPEC+ members have been restraining output in a bid to avoid a global surplus that could depress prices. Investors are now preparing for the gradual unwinding of the group's voluntary output curbs starting from October, at a time when fears of an oversupplied market are increasing rapidly due to weak Chinese demand and prospects of a Libyan truce that will restore oil flows in the region. "With the balance looking soft through 2025, the question is when the group will eventually be able to bring supply back onto the market without putting significant pressure on prices," ING analysts say in a note to clients.
Average domestic crude oil prices fell month-over-month in June by US$0.71, or 0.9%, to US$77.45 per barrel, the U.S. Energy Information Administration said in its Petroleum Marketing Monthly report released Tuesday. The average free-on-board cost of imported crude oil rose US$0.22, or 0.3% to US72.11/b. The average landed cost of foreign crude decreased US$0.93, or 1.2% to US774.55/B, the EIA reported. The average refiner acquisition cost for domestic crude oil fell US$0.97, or 1.2%, to US881.27/B, while the average cost of imported crude oil rose US$0.49, or 0.6%, to US778.83/B, the agency said.
DAILY CHART (Futures)
That said, our bearish setup remains valid and the harmonic structure seems to be working correctly. From a technical point of view, WTI reached the first support on daily chart around $69.27, but when the market decides to break it, the next support is around $65.13.
Please, continue to support our idea for future updates and thanks for watching.
Note
🔴 #TradingView continues to not update my ideas, so I will not post any more updates until I have some clarification on this. We are very sorry about this.Note
Oil prices extend losses after OPEC trimmed its forecast for demand growth for the second time in two months. Brent crude is down 3.1% to $69.63 a barrel, while WTI trades 3.4% lower at $66.37 a barrel. The cartel said it now expects global demand to grow by around 2 million barrels a day this year and by 1.7 million b/d next year, with lower-than-previously-anticipated growth from China and the U.S. OPEC forecasts that China's oil demand will grow by 650,000 this year compared with the growth of 700,00 b/d estimated in last month's report; while U.S. oil-demand growth expectations for 2024 were cut by 60,000 b/d to 110,000 b/d.Note
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