Crude oil Dropped On Worries Over Weak Economic Outlook Weighing On Oil Demand

  • Commodities Analysis
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Crude oil yesterday settled down by -1.54% at 5876 on worries over the weak economic outlook in China, Europe and the United States weighing on oil demand. In China, surging infections will likely depress economic growth in the next few months despite some restrictions being eased, bringing a rebound only later in 2023. Tightening financial conditions also weighed on markets, with the US Federal Reserve expected to raise interest rates further and keep them higher for longer. Meanwhile, investors cheered the easing Covid restrictions in China that sparked hopes of a wider economic reopening that could boost demand in the world’s top crude importer.

The shutdown of the Keystone pipeline also added to the highly uncertain supply outlook, with investors still assessing the impact of the latest sanctions on Russian oil. U.S. crude production rose by 100,000 barrels per day (bpd) last week to 12.2 million bpd, the highest since August, the U.S. Energy Information Administration said in its weekly Petroleum Status Report. The U.S. Energy Information Administration raised its forecast for this year's crude output growth marginally, while petroleum demand is likely to rise less than previously expected. For 2023, EIA projected that crude production would rise to 12.34 million bpd. That compares with a record 12.29 million bpd in 2019.

Technically market is under fresh selling as the market has witnessed a gain in open interest by 9.17% to settle at 23227 while prices are down -92 rupees, now Crude oil is getting support at 5805 and below the same could see a test of 5733 levels, and resistance is now likely to be seen at 5994, a move above could see prices testing 6111.

Trading Ideas:
# Crude oil trading range for the day is 5733-6111.
# Crudeoil dropped on worries over the weak economic outlook in China, Europe and the United States weighing on oil demand.
# U.S. oil output rises to 12.2 million bpd in latest week – EIA
# EIA projected that crude production would rise to 11.87 million barrels per day (bpd) in 2022, compared with its previous estimate of 11.83 million bpd.

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