Oil deepens declines below $74 as demand concerns persists 📉
During Tuesday's session, we can observe the continuation of declines in the oil market. Despite the fact that the end of last week, as well as yesterday's session, brought a slight rebound and an attempt to make a correction, today the initiative was once again taken by sellers, causing Brent, as well as WTI, to dive more than 3%.
- Oil demand growth is expected to slow in 2024, and the recent OPEC+ agreement to curb supply ultimately disappointed the market. Both OPEC and the IEA will update their forecasts this week, and perhaps the market is discounting a more bearish environment for oil prices today, in the months ahead.
- The outlook for global economic growth in 2024 is weaker, signaling subdued oil demand
- Israel's war on Gaza ultimately failed to escalate, and its impact on oil proved short-lived
- Jerome Powell may signal tomorrow that premature rate cuts will not be implemented, potentially adding to concerns about the cumulative impact of monetary policy on the US economy, in the longer term
- Election year in the U.S. according to some analysts suggests that Democrats will make efforts to keep gasoline prices lower
- Despite the higher risk of oil supply problems, in the Middle East after the Huti attack from Iran on a U.S. tanker, the market ignores scenarios suggesting possible supply problems and discounts concerns around supply outstripping demand.
OIL (D1)
Looking technically at the OIL (brent crude oil) chart, there was a test of a key resistance zone at $76.80, where sellers appeared. The overvaluation accelerated after the US inflation data, and a new local minimum was established. Thus, this confirms the downward trend that oil has been in since mid-September this year. If the current sentiment will not change, the basic scenario is an attack on the zone at $71.60, resulting from previous price reactions.
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OIL interval D1. Source: xStation5
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