OPEC’s bearish outlook on demand is reigniting worries about a supply glut and tensions in the Middle East have receded.
USOIL – Daily Chart
The price of USOIL has fallen back from strong gains to the $78 level. The support lower comes in at $67.70 and $76 would need to be crossed to remain bullish.
US crude oil futures dropped by more than 2% on Monday after OPEC cut its demand forecast for 2024 for the third consecutive time.
OPEC now sees demand growing by 1.9 million barrels per day in 2024, down from 2 million bpd in a previous forecast, the group said Monday. OPEC now expects demand to grow by 1.6 million bpd in 2025, compared with 1.7 million bpd previously.
A Chinese finance minister also disappointed the market during a weekend press briefing, with traders unsure about the level of stimulus coming from the world’s second-largest economy. Softening demand in China, oil’s largest customer, has dragged the market lower for months.
“China’s monetary stimulus measures failed to stimulate and the weekend’s pledge from the finance ministry to borrow more was long on cliches and phrases but short on reassuring and convincing details,” said Tamas Varga, analyst at oil firm PVM.
Traders continue to monitor the Middle East over fears of a retaliatory strike by Israel against Iran. US officials have apparently limited their targets and have said they will be focused on military assets, rather than nuclear or infrastructure, according to NBC.
Oil prices looked like they had found a floor but weakness in the global economy is still hurting the outlook for demand. There could be further volatility ahead as a strike from Israel could see further attacks from Iran.
