WTI Crude Oil Holds at $70 Amid Middle East Tensions and China Stimulus Uncertainty

Middle East Tensions Keep Oil Markets on Edge

As the Middle East heats up, traders are watching closely, especially Israel’s response to Iran’s October 1 missile attack. While reports suggest Israel will target Iranian forces rather than oil infrastructure, supply disruptions are still a big factor in oil prices. IG market analyst Tony Sycamore says “The price of crude right now is around $70 as we wait for catalysts, China’s NPC Standing Committee meeting and Israel’s reaction to Iran’s actions.”

Oil heads for weekly gain as Middle East tensions keep market on edge – https://t.co/8fV0nBLQuJ

— MOHD ABU HAMAM (@MOHDABUHAMAM10) October 25, 2024

Oil prices seesawed Thursday, with WTI and Brent down 58 cents. The Middle East is still a big worry, but US and Israeli negotiators are set to restart ceasefire talks in Gaza which should ease the market. But the focus may also shift to the broader conflict in Lebanon and how that impacts the region’s oil supply.

China’s Stimulus Policies and the Global Oil Market

Investors are also waiting for more clarity from China, the world’s second biggest oil consumer, on stimulus policies. While there’s growing expectation around Beijing’s policies, Sycamore thinks these won’t lead to a big increase in oil demand. Instead, broader concerns like Middle East oil supply and global weather patterns during winter will be more important in determining price direction.

Despite the uncertainty around Chinese demand, Goldman Sachs is sticking to its previous forecasts for oil, gas and coal prices. The bank says any Chinese stimulus will only give a small boost to energy prices, while winter weather and Middle East supply disruptions will be the bigger drivers in the months ahead.

and minimal impact on global oil prices due to the unified nature of the global oil market furthermore, increased domestic drilling might not significantly lower gas prices for consumers and could still contribute to climate change issues.

Do you know/care what drilling will do?

— Cordelia Hudson (@hudsoncordelia1) October 25, 2024

WTI Crude Oil Price Forecast: Bearish Sentiment Prevails

Technically, WTI crude is bearish after breaking below the upward trendline which was support at $71.00. The price action is showing strong selling pressure after failing to get back above $70.65. If this bearish momentum continues, next support is at $69.85, then $69.25 and potentially $68.50.

Resistance is at $70.65 and then $71.50. The 50-day EMA is at $70.75 and is bearish, the RSI is 42.38 and showing weak momentum and more downside.

Quick Points:

• Oil Prices Up: WTI and Brent to end the week up 1% or more.

• Technical: WTI resistance at $70.65, support at $69.85 and down to $68.50.

• Global: China’s stimulus and Middle East supply risks.

So while oil has held up this week, the geopolitical and technicals are bearish so more downside risk in the short term. Watch the Middle East and China.