USOIL | The Sell Off is near
WTI crude oil prices have shown a downward trend in recent sessions, falling for three consecutive days. Currently, WTI stands around the $80.70 region, recording a daily loss of about 0.40%. Despite this decline, the price remains above the overnight swing low, suggesting a lack of conviction among sellers.
Factors Influencing Prices
Chinese Economy:
Economic Growth Data: Official data released on Monday showed that China's economy grew by 4.7% in the second quarter of 2024, down from 5.3% in the first quarter. This has fueled concerns about a slowdown in the Chinese economy, the world's largest oil importer, and a consequent decrease in fuel demand.
Impact on the Oil Market: Concerns about Chinese demand are a key factor exerting downward pressure on crude oil prices.
Strength of the US Dollar (USD):
Dollar Recovery: The US dollar has gained traction, recovering from a more than three-month low touched on Monday. A stronger dollar makes USD-denominated oil more expensive for buyers using other currencies, thereby reducing demand.
Monetary Policy Outlook: The growing acceptance that the Federal Reserve might start a rate-cutting cycle as early as September could limit further dollar gains, partially mitigating the negative effect on oil prices.
Supply Concerns:
Middle East Conflicts: Concerns about potential supply disruptions due to ongoing conflicts in the Middle East continue to support oil prices. This factor could limit further losses in the short term.
Forecasts and Expectations
Price Range: WTI seems to remain confined within a familiar range maintained over the past two weeks, with prices oscillating around the $80.70-$81.30 region.
Awaiting External Impulses: Market participants are now waiting for US retail sales data to find new drivers that could influence prices.
Need for Confirmation: To position for a further extension of the recent pullback from levels near $84.00, it would be prudent to wait for more convincing selling signals.
Factors Influencing Prices
Chinese Economy:
Economic Growth Data: Official data released on Monday showed that China's economy grew by 4.7% in the second quarter of 2024, down from 5.3% in the first quarter. This has fueled concerns about a slowdown in the Chinese economy, the world's largest oil importer, and a consequent decrease in fuel demand.
Impact on the Oil Market: Concerns about Chinese demand are a key factor exerting downward pressure on crude oil prices.
Strength of the US Dollar (USD):
Dollar Recovery: The US dollar has gained traction, recovering from a more than three-month low touched on Monday. A stronger dollar makes USD-denominated oil more expensive for buyers using other currencies, thereby reducing demand.
Monetary Policy Outlook: The growing acceptance that the Federal Reserve might start a rate-cutting cycle as early as September could limit further dollar gains, partially mitigating the negative effect on oil prices.
Supply Concerns:
Middle East Conflicts: Concerns about potential supply disruptions due to ongoing conflicts in the Middle East continue to support oil prices. This factor could limit further losses in the short term.
Forecasts and Expectations
Price Range: WTI seems to remain confined within a familiar range maintained over the past two weeks, with prices oscillating around the $80.70-$81.30 region.
Awaiting External Impulses: Market participants are now waiting for US retail sales data to find new drivers that could influence prices.
Need for Confirmation: To position for a further extension of the recent pullback from levels near $84.00, it would be prudent to wait for more convincing selling signals.
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