Stronger dollar and demand concerns put pressure on prices
OIL.WTI price dropped more than 3.0%, extending yesterday's losses as demand concerns resurfaced as geopolitical tensions eased. NATO announced that Russia was not behind the missile attack in Poland, easing fears of a conflict escalation in Europe. Meanwhile China continues to face rising Covid cases that clouded the demand outlook in the world’s biggest crude importer. JPMorgan expects hawkish FED and higher interest rate hikes will push the US economy into a mild recession in 2023. On the supply side, transfers of Russian oil to Hungary via the Druzhba pipeline had resumed following a brief power disruption. Also strengthening greenback is adding additional pressure on the whole commodity sector. However, traders should remain cautious about the supply outlook as the EU is expected to ban Russian crude flows from December, while OPEC is expected to keep supply tight. Also recent data from the Joint Organizations Data Initiative (JODI) showed that global demand jumped in September and exceeded the September 2019 pre-Covid levels by nearly 1 million bpd.
OIL.WTI broke below the major support zone at $83.30 which is marked with previous price reactions and if current sentiment prevails price may be heading towards key support at $81.20 where October lows are located. Should sellers manage to break lower, downward move may accelerate towards $76.20, which is marked with lower limit of the 1:1 structure and 78.6% Fibonacci retracement of the upward wave launched in December 2021. Source: xStation5
