Crude Oil Set for a 6% Weekly Decline Amid Mixed Economic Signals and Supply Risks

Demand Uncertainty Hits Oil Prices

Demand for crude oil has weakened after OPEC and the IEA trimmed their forecasts for 2024 and 2025. Both cut global oil demand after slower than expected recovery, especially in China, the world’s biggest oil importer. China’s 3Q GDP growth was the slowest since 2023 and oil consumption fears. While September’s industrial output and consumption data was better than expected, China has officially missed its 5% growth target for the year.

Crude oil prices steadied on Friday, with Brent crude at $74.53 a barrel and U.S. WTI (West Texas Intermediate) at $70.82, but both contracts are set for a 6% weekly drop

— tasleem (@TasLem_official) October 18, 2024

IG market strategist Yeap Jun Rong said: “While US economy is stable, the market is waiting for signs of demand rebound in China after recent stimulus.”

China’s refinery output has been declining for three months due to weak fuel consumption and narrowing refining margins. That added to global demand concerns and put pressure on prices.

Geopolitics in Play

Despite demand fears ruling the oil market, geopolitics is still in the picture. Middle East instability, especially between Israel and Iran, has caused short term oil price spikes. Markets are worried about supply disruptions from the region as Hezbollah has just escalated its conflict with Israel.

According to Priyanka Sachdeva, senior market analyst at Phillip Nova, “Geopolitics will keep supply fears alive and oil prices will see more volatility in the short term.”

While these geopolitics has added volatility to oil prices, the overall downward trend still prevails due to broader demand concerns, especially from Asia.

📢 Market Updates 📢
📊 Oil Prices Up Slightly But Still Down for the Week.
🛢️ Oil prices went up a little after a drop in U.S. inventories. But it set for a 6% weekly loss. Higher U.S. production and worries about demand are keeping prices lower.#OilPrices #CrudeOil…

— IUX Official (@iux_official) October 18, 2024

WTI Crude Technical Outlook: Tight Range, Levels to Watch

WTI Crude Oil is at $70.35 per barrel above $69.45 support. This support has capped the decline after the big drop. Resistance is at $71.27 which is the pivot. A break above this level could lead to more upside to $71.90 and $73.09.

However the symmetrical triangle on the 4 hour chart is tightening. This pattern often means consolidation before a breakout so traders should keep an eye on the levels.

The 50 day EMA at $71.27 is adding pressure on the resistance while the RSI at 39.23 is neutral to oversold. If WTI fails to hold $69.45 it could drop to $68.14 and potentially $66.40 to further the decline.

Technical Notes:

• $69.45 is the support level, capping the decline.

• Break above $71.27 could lead to more upside to $71.90 and $73.09.

• RSI at 39.23 is mildly oversold, could recover if support holds.

In summary, while WTI Crude Oil is having its worst week in over a month, upcoming data and geopolitics will be key. Be cautious as the market is in a tight range.