Will the theme of weak demand and oversupply dampen oil prospectMacro theme:
- Oil prices have declined since last week as investors expect an OPEC+ supply increase in Oct and a potential deal in Libya to resume production, possibly adding over 500,000 barrels per day.
- Weak economic data from China, including Tue's ISM Manufacturing PMI, highlighted the country's sluggish recovery, fuelling calls for more stimulus.
- Concerns over China's weak demand and the prospect of increased supply are likely to keep oil prices under pressure in the short term.
Technical theme:
- USOIL tested EMAs' area confluence with 77.00 resistance before breaking below 71.50 support to maintain a bearish structure.
- If USOIL maintains below the 71.50 level, the price may continue to decline to test 67.80 support.
- On the contrary, if USOIL can close above 71.50, the price may retrace to retest its EMA21 along with the upper bound of its descending channel.
