Crude Oil Updates by Solid ECN

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US100​

Stock traders launched a new week in upbeat moods with indices from Asia-Pacific finishing today's trading higher and European benchmarks advancing as well. US index futures also trade higher with Russell 2000 (US2000) leading with 0.7% gain and Nasdaq-100 (US100) lagging behind others with 0.3% gain. The week ahead is slightly lighter in terms of data and macro events than previous ones but traders will be nevertheless offered some interesting reports. US retail sales data for April tomorrow at 1:30 pm BST as well as Powell's speech on monetary policy on Friday, 4:00 pm BST are top events to watch in US macro calendar for the week. US tech shares may see some moves later into the week when Alibaba Group reports earnings on Thursday.

Taking a look at US100 chart at H1 interval, we can see that the index managed to halt recent declines at 13,330 pts support zone, marked with 23.6% retracement of the upward move launched in late-April, lower limit of the market geometry as well as the upward trendline. Bouncing off this area confirmed the bullish sentiment and index started to recover recent losses. A break above 50-hour moving average (green line) was delivered today and now the way for a test of recent highs just shy of 13,500 pts mark is open.​

 

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Crude Oil​

Crude oil price shows some slight bullish bias now, affected by grand support (62.3 - 62.7) current positivity, and it might test the key resistance (82.29 - 85.31) .55 before turning back to decline again.

H4: Noting that the EMA50 meets this resistance to add more strength to it.

Until now, the bearish trend scenario still valid and active as long as (69.56) area remains intact, waiting to visit (72.7 - 73.7) area as a next main target, noting that breaching 73.7 will lead the price to recover and achieve gains that start at 76.7 direct.

 

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Crude Oil​

Weekend meeting of OPEC+ group was watched closely but was not expected to result in any changes to the level of agreed output cuts. This turned out to be partially true. While OPEC+ decided not to deepen output cuts, it has agreed to extend the current output cut agreement through 2024. However, Saudi Arabia announced that it will make a voluntary output cut of 1 million barrels per day. The cut was announced for July only but Saudi officials already warned that it may be extended if the situation requires it.

Baseline production levels were adjusted for 2024 and it could be seen as somewhat bearish. This is because production quotas were redistributed from countries that struggled to meet production targets to countries that have spare production capacity. As a result, it may lead to better compliance with production targets across the group and, in turn, to higher combined production.

Taking a look at WTI chart (OIL.WTI) at D1 interval, we can see that the price launched a new week with a big bullish price gap. While Brent (OIL) jumped around 1.7% at the beginning of a new week, WTI opened with an around-4% price gap. OIL.WTI jumped above the $73-74 per barrel resistance zone and tested 50-session moving average (green line). However, bulls failed to break above it and gains started to be erased as the Asian session progressed. Price has almost completely filled the bullish price gap but has bounced off the daily lows since.​

 

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Oil​

Oil is taking a hit at the beginning of a new week. Brent (OIL) and WTI (OIL.WTI) are trading around 1.5% lower at press time. Recent OPEC actions and announcements provided only a short-term boost for prices and oil quickly resumed pullback. Brent dropped and reached the lowest level since the beginning of June today. There is no strong, clear reason behind the move lower today. However, some news surfaced recently that may support bears today.

Iranian authorities made some upbeat comments on possible agreement between Iran and the West that may lead to a lifting of sanctions on Iranian oil. However, it should be noted that negotiations have been going on for years now and similarly positive comments did not lead to any breakthrough earlier. Apart from that, Goldman Sachs slashed its December 2023 Brent price forecast from $95 to $86 per barrel, citing increased recessionary fears as well as higher output in Iran, Venezuela and Russia as reasons.

Taking a look at OIL chart at H4 interval, we can see that the price launched this week's trading with a bearish price gap and moved lower to test the $74 support zone. At first it looked like bulls may manage to halt sell-off there but selling resumed and OIL slumped below. Brent is quoted in the $73 per barrel area now and trades less than 1% higher month-to-date after gaining as much as 8% MTD earlier. The next support zone to watch can be found in the $72.50 area and is marked with local lows from mid-March, early-May and early-June 2023.​

 

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Oil​

Brent (OIL) launched new week's trading with a bearish price gap as new on rising Iranian exports as well as cuts to Chinese growth forecasts created downward pressure on prices. OIL tested 200-period moving average at H4 interval this morning (purple line) but bulls managed to defend the area.

 

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Oil - Morning Wrap​

• Feud between Russian Ministry of Defense and PMC Wagner escalated into a rebellion over the weekend with the latter taking control of a few Russian cities and marching an armored convoy towards Moscow​
• However, a deal between Kremlin and PMC Wagner was brokered by Belarusian president Lukashenko and the short-lived rebellion was ended​
• Given lack of any significant resistance from the Russian army against Wagner's advance on Moscow, war analysts wonder whether the uprising was staged​
• As Wagner's mutiny started and ended before the opening of markets, we do not see any major reaction to the events. Oil and precious metals opened slightly higher​
• Indices from Asia-Pacific traded mixed during the first session of a new week. Nikkei dropped 0.1%, S&P/ASX 200 declined 0.4%, Kospi gained 0.4% and Nifty 50 gained 0.1%. Indices from China traded 0.3-1.5% lower​
• European index futures point to a more or less flat opening of the cash session on the Old Continent​
• SNB Chairman Jordan said that recent rate hikes were likely not enough to bring inflation down​
• Chinese travel activity has still not recovered after a pandemic. Data for recent Dragon Boat Festival holiday (June 22-24) showed travel was 22.8% below pre-pandemic 2019​
• Summary of Opinions from BoJ June meeting showed that CPI inflation is not expected to drop below target towards the end of the year. On top of that, one member saw it as appropriate to make changes to yield curve control mechanism​
• OPEC expects global oil demand to reach 110 million barrels per day by 2045​
• Saudi Aramco head said that China and India account for over 2 million barrels of oil demand growth​
• S&P Global lowered its Chinese GDP growth forecast for 2023 from 5.5 to 5.2%​
• Cryptocurrencies are trading lower - Bitcoin drops 0.6%, Ethereum trades 0.9% lower and Dogecoin slumps 1.6%​
• Energy commodities gain - oil trades 0.2% higher while US natural gas prices jump 2%​
• Precious metals advance - gold trades 0.4% higher, silver jumps 1.6% and platinum adds 1.4%​
• GBP and NZD are the best performing major currencies while USD and CHF lag the most​

OIL.WTI opened higher following a short-lived Russian coup but all of the gains have been erased already.​

 

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Oil Loses 1.5% as China's Growth Disappoints​

China's GDP growth came out below market expectations! Looking at expectations from the Bloomberg survey, only one economist expected that the country's growth could be at such a “low level”. Of course, looking at the dynamics, growth of 6.3% y/y does not seem weak, although more was expected (growth of 7.1% y/y). In the first quarter, growth was 4.5% y/y. It's worth remembering that in the second quarter of last year, China introduced very restrictive covid measures, including in the Shanghai region, which then severely limited economic growth. That is why the market expected that economy would grow much stronger.

In quarterly terms, growth came out at 0.8% q/q, in line with market expectations and the growth in the previous quarter was 2.2% q/q. Industrial production for June grew stronger than expected at 4.4% y/y and retail sales were slightly below expectations at 3.1% y/y. So where is the problem with the Chinese economy? In the real estate market and in the "strong" yuan. The yuan is not weak enough to boost subdued exports. On top of that, real estate market sentiment remains very weak. At the same time, it seems that GDP data is not weak enough to lead to a further cut in interest rates. PBOC will decide on interest rates on July 20 and despite weak data, there is no expectation that the bank will cut rates once again. Recently, the PBOC surprised negatively by cutting rates less than expected.

Oil is losing nearly 1.5% today, mainly due to data from China, as the country is responsible for a very large share of expected demand growth this year. At the beginning of the year, imports were disappointing due to high inventories. Now that inventories are running out and China should import more oil. However, without a stronger stimulation of the economy, China's demand growth may fall short of expectations. At the same time, looking from the side of oil itself - a very cheap dollar may support the continuation of the rebound, although a "tactical correction" cannot be ruled out.

Brent oil is testing the area of $78.5 per barrel. If this level is broken, a test of the area around $77 per barrel cannot be ruled out. The size of the range of the previous downward wave also falls slightly lower. Seasonality indicates that further decline may be seen until the end of July. Nevertheless, for the moment, the uptrend remains unbroken.​

 

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Oil - What You Need to Know​

Recently, Russia and Saudi Arabia decided to keep reducing the amount of oil they produce until the end of 2023. This move has made a big impact on the price of oil worldwide. These two countries are important in the oil market, and their decision to cut back on oil production has made experts think that oil prices will go up. After this announcement, the price of Brent crude oil went up by more than 1.5%, reaching over $90 per barrel. The price of U.S. West Texas Intermediate (WTI) crude oil also went up by a similar amount, reaching $86.5 per barrel. This decision to extend the cuts was a surprise because most investors thought the cuts would only last until October.

To make sense of these numbers, Saudi Arabia said it would keep producing 1 million fewer barrels of oil each day for another three months, until the end of December 2023. Russia, on the other hand, decided to export 300,000 fewer barrels of oil each day for the same period. These cuts are on top of the cuts that the OPEC+ group had already agreed on, which will last until the end of 2024. It's important to know that Saudi Arabia needs the price of Brent crude oil to be around $81 per barrel to manage its budget, according to the International Monetary Fund. Russia, on the other hand, can manage with a lower oil price but wants to make more money to support its war efforts in Ukraine.

Because there's not a lot of oil available right now, and the future is uncertain, the price of oil is likely to stay high in the short term. Rystad Energy, a research group, predicts that the demand for liquid fuels worldwide will be about 2.7 million barrels per day more than what's available in the next few months. The price of Brent crude oil for the month ahead is at its highest point in nine months, which means people expect there to be a shortage of oil soon. But there's a catch: in the U.S., oil refineries usually close for maintenance in September and October, which means they'll use less oil during that time. This could help keep oil prices from going too high.

Looking ahead, the OPEC+ group will have a meeting in November to decide how much oil they should produce in early 2024. Their decision will be really important in deciding how much oil costs and how the oil market works.​

 

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Understanding the Impact of Rising Oil Prices on the Global Economy​

The price of oil is going up, and people think it might stay high for a while. Some people think it won't go over $100 per barrel, but others aren't so sure. The price has already hit a 10-month high of $95 per barrel.

Countries like Saudi Arabia and Russia have been producing less oil, which means there's less oil available worldwide. This has helped push up the price.

Higher oil prices can lead to higher prices for other things too, because oil is used in many industries. This could lead to inflation, which is when prices go up across the board. People are worried about this because it could slow down economic growth.The stock market has been reacting to these changes. Some parts of the market might benefit from higher oil prices, while others might struggle.

Investors are trying to protect themselves from the risks of higher oil prices and potential market volatility. They're using certain types of securities to do this. Some investors are still positive about the energy sector and are investing more in it. The changes in the oil market are having big effects on the global economy and financial markets, so investors and policymakers need to keep a close eye on things.​

 

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**Intraday Crude Oil Prices Dip Amid US Rate Hike Expectations**

Crude oil prices are experiencing a downward trend in today's trading session. This decline is largely due to the anticipation of a US rate hike, which has overshadowed the tight supply outlook. The recent dynamic rally has also triggered some profit-taking on the instrument.

**US EIA Data Influences Energy Markets**

Energy markets are responding to the latest data from the U.S. Energy Information Administration (EIA). The data revealed a decrease in oil inventories by 2.14 million barrels. ANZ analysts highlighted in their report that the unexpected drop in inventories encouraged investors to secure profits following a 10% increase since the start of the month.

**Brent Crude and OIL Quotes Show Decline**

Today's session sees Brent crude down by nearly 1%, while OIL quotes indicate a decline of approximately 2% after the most recent futures contract rollover.

**Potential Short-lived Decline Amid Tight Global Supply Concerns**

Despite the current decline, it's possible that this could be a temporary dip. There are ongoing concerns in the market about a tight global supply in Q4. Crude inventories at Cushing, the supply hub for WTI, are at their lowest since July 2022. Additionally, production cuts continue to be implemented by OPEC and its affiliated economies.

**BRENT Crude Oil Prices Eyeing Support Level**

Following the futures rollover, BRENT crude oil prices are moving towards a support level established by a consolidation zone near the $90 per barrel mark.​

 

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WTI Oil​

WTI oil is set to continue its downward trend after a brief consolidation period on early Thursday. This follows a significant drop the previous day, marking the largest daily loss since July 5, 2022.

The sentiment has been affected by concerns over demand following recent weak economic data, suggesting a potential further slowdown in global economic growth.

The OPEC+ group, in their meeting on Wednesday, decided to maintain their current oil output policy. Saudi Arabia and Russia have chosen to keep their voluntary output cut unchanged for the rest of the year. Oil prices have dropped to a one-month low, with Wednesday's sharp fall contributing to a reversal pattern on the daily chart.

The price has broken through a key Fibonacci support level at $84.31, indicating that the major downtrend from the 2023 high of $95.00 may continue.

Despite strong bearish momentum, there are signs that the downtrend may start to weaken. However, any price increases should be limited and present better selling opportunities. The previous consolidation floor and broken Fibonacci level at $88.00/40 should limit any significant price increases.

Resistance: 84.90; 86.00; 87.54; 88.00.
Support: 83.88; 81.71; 81.00; 80.00.​

 

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Crude Oil Market Analysis​

Crude Oil rose from $80, which is in the Ichimoku cloud, and is currently testing the broken support around $84. Bears successfully broke out of the channel and the outlook of the current market is bearish, with the RSI hovering below the 50 line in the Crude Oil daily chart.

The bearish bias of Crude oil is more vivid in the 4H chart, as the black gold is trading below the pivot and within the bearish channel.

With the price holding below the 84.36 pivot, we expect the decline in Crude oil to continue and target the 80 support followed by 77.86.

On the flip side, if the oil price closes above the bearish channel in the 4H chart, the short-term bearish scenario will be over, and bulls are likely to drive up the price to test the daily resistance around $88 in upcoming sessions.​

 

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Crude Oil

The price of WTI oil increased by almost 1.5% during the Asian and early European trading sessions on Wednesday. This was due to renewed fears about oil supply after a deadly explosion at a hospital in Gaza increased tensions in the region.

The price started to rise again from the low of $81.52 on October 6 after a two-day pause. This rise is seen as a positive sign as it broke through an important level at $88.26.

If the price stays above this level, it could speed up towards the next key levels at $89.85 and $90.00.

However, some technical indicators on the daily chart are giving mixed signals. For example, the 14-day momentum is negative and the market is overbought. But, the rising daily Ichimoku cloud and moving averages turning bullish are supporting the price rise.

As long as the price stays above supports at $88.26 and $87.72, the positive outlook is expected to remain. But, if the price falls and closes below $86.67, there could be more downside risk.

Resistance levels: 89.05; 89.85; 90; 91
Support levels: 88.26; 87.72; 86.67; 85.59​

 

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Crude Oil​

The U.S. oil industry, known as "Big Oil", is seeing growth in production and mergers. Active drilling rigs increased to 502 for oil and 122 for gas last week, marking a second week of growth. Daily oil production has hit a record 13.2 million barrels per day.

Crude oil stocks are 4% lower than last year, possibly encouraging more investment in oil production. The U.S. government's decision to buy oil for its Strategic Petroleum Reserve may have also played a part.

Chevron is buying Hess for $60 billion, following Exxon Mobil's acquisition of Pioneer Natural Resources for $58 billion. The easing of sanctions on Venezuela could benefit U.S. oil producers with operations there.

Long-term factors like Middle East conflicts and potential supply disruptions are encouraging investment in U.S. oil production. Despite this, OPEC+ countries are limiting production to maintain prices.

This could signal a shift from focusing on profits to a battle for market share, a challenging task given years of record interest rates. However, major players with substantial capital reserves and strong government lobbying power are now involved.

Crude oil prices are currently testing the lower boundary of a bullish channel, with the Stochastic oscillator indicating an oversold market condition. If prices manage to settle below this critical level, we could see a continuation of the downward trend, potentially reaching the S2 support level around $83.​

 

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Crude Oil​

Crude oil is currently showing a bearish trend, consistently trading within a bearish channel. The Relative Strength Index (RSI) is attempting to cross the crucial 50 mark, a movement that could indicate potential market shifts. However, it's not a guaranteed sign of a bullish reversal.

The oil price is testing a significant resistance at $83.2. The result of this test could offer insights into future price trends. A break above this resistance might suggest a shift in market sentiment, while failure to do so could reinforce the bearish trend.

The oil market remains bearish as long as the price stays within this channel, indicating that sellers currently have the upper hand. If the bearish momentum persists, the oil price might drop to $80. However, this is a prediction and actual market movements can vary.​

 

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Oil

The price of crude oil has recently experienced a decline, reaching the median line of its bearish channel. This downward trend aligns with expectations set when a bearish engulfing pattern emerged close to the bullish flag's upper boundary.

It's anticipated that the oil price may stabilize somewhat near the bearish flag's central line. Nevertheless, the projected target appears to be the S1 level, corresponding to a support point around $72.​

 

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How OPEC+ Cuts and Middle East Conflict Affect Oil Prices

Solid ECN – Oil prices continue to go down to $72.3 per barrel on Tuesday, the lowest since five months ago. This is because people are not sure if the OPEC+ group can reduce the oil supply enough and they are worried about the lower demand for energy due to weaker data in big economies.

Last week, some OPEC+ members, such as Saudi Arabia, UAE, and Kuwait, said they would cut more oil supply by 2.2 million barrels per day, but some members have not agreed yet. Saudi Arabia’s energy minister also told Bloomberg on Monday that the OPEC+ group might keep cutting the oil supply after the first quarter if needed. However, traders are still nervous about the rising conflict in the Middle East, especially the increased fighting in Gaza over the weekend.​