Oil Price Dips As US Demand Slow, Rising Supply

Fundamental Analysis

* Energy Ebb: The price of the crude oil have fell due to an unexpected increase in U.S. stockpiles, raising concerns about sluggish demand from the world’s largest oil consumer. The U.S. Energy Information Administration (EIA) reported a 3.6-million-barrel rise in the country’s crude oil stocks last week, surprising analysts polled by Reuters who had anticipated a 2.9-million-barrel decrease. Additionally, product supplied for motor gasoline, which serves as a demand indicator, dropped by approximately 417,000 barrels per day last week, reaching 8.97 million bpd. The four-week average for demand is about 2% lower than last year’s levels. Despite the peak summer driving season, demand failed to significantly reduce U.S. crude supply, thus putting downward pressure on prices.

Technical Analysis

* Technical Breakout: Crude oil price was traded lower following prior retracement from the resistance level 81.40. MACD which illustrate ongoing bearish momentum signal suggest the pair to further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 79.35. Conversely, a potential correction is also to be expected and the price could head back towards 81.40.

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Potential Risks

Moving ahead, the market will closely monitor geopolitical tensions in the Middle East, where cross-border strains between Israel and Lebanon’s Hezbollah have been escalating in recent weeks. This has raised fears of a full-scale Israel-Hezbollah war, which could involve other regional powers, including major oil producer Iran, potentially impacting oil prices.

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Monitoring

Stay updated on US and global data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.