OIL loses 3.7% amid macro fears erasing Middle-East tensions premium

Today, Brent Crude (OIL) futures retests June lows, when prices fall below $77 USD per barrel amid OPEC+ decisions. US dollar futures (USDIDX) are dropping more than 1% with US treasury yields dropping below 3.85% amid macro fears, after weak Non-Farm Payrolls report.

• So, despite Middle East tensions and low US inventories levels, oil prices are dropping today on the wave of recession fears, which signal better demand supply balance.
• Also, looking on the Middle East we still don't have any real signs of a broader (not regional) conflict between Israel and Iran armies and as long as markets see escalation only as a regional war (Hezbollah and Hamas against Israel), we cannot expect rising oil prices.
• Also, LSEG Oil Research data showed the weaker oil imports in Asia, trimmed by weak China and India demand. With falling demand globally, OPEC+ may also fear 'lifting prices' strategy, which may lead to 'demand destruction' scenario.
• As for now, OPEC+ remains on track to boost production starting next quarter (monitoring meeting from Thursday 1 August). As for now, OPEC chairs have insisted supply hikes can be paused or reversed as needed.

OIL (interval D1)

Today, oil retests local lows near $77 level from February and June 2024. Dropping below $77 level may lead to test $72 per barrel - the local lows from January 2024.

Source: xStation5