Oil is trading higher today, with Brent (OIL) advancing 1.2% and WTI (OIL.WTI) trading around 1.6% higher at press time. The move higher is a continuation of the rebound launched last week, and comes even in spite of OPEC lowering its global demand growth forecasts today. Growth forecast for 2024 was lower by 140 thousand barrels per day, while forecast for 2025 saw a 70 thousand barrels downward revision. Group explained that the revision was driven by deterioration in outlook for Chinese oil demand growth. However, growth is still expected to remain 'healthy'.
New OPEC global demand growth forecast
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- 2025: +1.78 million barrels per day, down from previous forecast of +1.85 million bpd
The move higher today can be blamed on geopolitics as tensions in the Middle East remains high and the feared Iranian response to assassination of Hamas leader in Teheran is yet to come. Fox News came out with a report today saying that Iran and its proxies in the region may launch a large missile attack on Israel within the next 24 hours. However, it should be said that there have been a number of such warnings from news outlets in recent days.
Near-term outlook for oil will depend on the scale of Iranian attack and damage it causes. If the majority of missiles are intercepted by Israel and its allies, as was the case in April, then Israeli response will likely be limited and the Middle East should avoid broader conflict, at least for now. However, if the attack causes significant damage, then it is more likely than not that Israel will retaliate with significant force as well, which would trigger an Iranian response, and the situation in the region could escalate into an all-out war between Israel and Iran.
Taking a look at OIL chart at H4 interval, we can see that price is trading around 8% above last week's lows and is making a break above the $81 per barrel mark at press time. A potential near-term resistance zone to watch can be found in the $81.50 area, where the 50% retracement of the downward move launched at the beginning of July can be found.
Source: xStation5
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