Oil trades 1% higher, extending rebound launched yesterday in the afternoon
Oil dropped hard following a release of disappointing trade data from China yesterday, which showed weakness in both foreign and domestic demand. Data also showed Chinese oil imports in July dropping to the lowest level since January, dropping 18.8% YoY to 10.29 million barrels per day. This is a noticeable drop given that record imports were reached as recently as in May above 17 million bpd.
Even with a slight decline in demand in China in the coming months, this year will be a record-breaking one for China in terms of oil demand. Additionally, OPEC+ is keeping supply tight, and a deficit of around 1.5-2.0 million barrels per day is expected in the second half of the year. Such a deficit led to a surge in prices to $150 per barrel in 2007-2008 period. Of course, it's important to remember that now deficit results from a decision to limit supply.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appWTI is breaking above local highs from April when OPEC+ announced production target cuts for the first time this year. Now, the production reduction has a tangible impact on market fundamentals. Oil is trading at its highest level since November, which is a warning signal indicating that energy prices will have a positive impact on year-end inflation, precisely in November and December, if prices remain at current or higher levels.
WTI (OIL.WTI) broke above the local high from April and the next resistance levels in-line can be found in the $85 area, where the 38.2% retracement can be found, as well as near $87 per barrel mark. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
