Crude oil stabilized as tightening global supplies offset concerns about demand

  • Kedia Advisory
  • Commodities News
Crude oil stabilized as tightening global supplies offset concerns about demand
Credit: © Reuters.

Crude oil prices experienced a marginal decline of -0.14% to settle at 7248, with several factors influencing the market sentiment. Notably, Saudi Arabia and Russia's joint decision to extend voluntary supply cuts of 1.3 million barrels per day until year-end helped tighten global oil supplies. This move aimed to support oil prices, reflecting concerns about the supply-demand balance. However, concerns about sluggish economic growth in China, the largest global crude importer, continued to weigh on commodity markets. 

The International Energy Agency (IEA) revised down its 2024 oil demand growth forecast to 1 million barrels per day, citing lacklustre macroeconomic conditions. In contrast, OPEC's August report maintained its 2.25 million barrels per day demand growth projection. The euro zone's growth outlook also faced adjustments, with expectations of slower growth in 2023 and 2024. The European Commission attributed this slowdown, in part, to a sluggish German economy, impacting the overall economic performance of the eurozone. On a positive note, U.S. crude oil inventories continued to decline for the fourth consecutive week. 

From a technical perspective, the market observed long liquidation, with a notable -16.81% drop in open interest, settling at 7175 contracts. Crude oil found support at 7196, with a potential downside test at 7143. Resistance levels were anticipated at 7303, and a move above this level might push prices towards 7357.

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