Oil Price Fell Following China Demand Fears

Fundamental Analysis

* Demand Drag: Crude oil prices continued to decline from the previous session due to worries about weakening demand from China, the world’s largest oil consumer. Recent data revealed an 11% drop in China’s total fuel oil imports during the first half of 2024 amid sluggish growth. Additionally, a series of disheartening economic reports, including a third consecutive month of contraction in China’s manufacturing activity in July, have further pressured oil prices. On the other hand, recent news of huge Dangote oil refinery in Nigeria reselling cargoes of U.S and Nigerian crude after technical problems also weigh on the price.

Technical Analysis

* Technical Breakout: Crude oil price was traded lower while currently testing the support level 75.30. MACD which illustrate bearish momentum signal with the formation of death cross suggest the commodity to extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 72.45 after breaking below the support level of 75.30. Conversely, a potential reversal is also to be expected and the price could head back towards 78.50.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving ahead, the market will closely watch several key data points, including crude oil inventories, the Federal Reserve’s rate decision, and the Non-Farm Payroll report, all set to be released later this week. Additionally, investors will monitor developments in the Middle East, as rising tensions between Israel and Iran could influence 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.