On Friday, August 23, the international crude oil market continued its fluctuations in a complex environment. Brent crude oil and WTI crude oil futures prices saw a slight increase during Asian trading hours. Despite this modest rebound, oil prices are expected to end the week lower due to ongoing concerns about demand and easing supply pressures.
As of 3:45 PM Beijing time, Brent crude futures rose by 0.19% to $76.71 per barrel. However, this represents a decrease of about 3.62% from the previous week. U.S. West Texas Intermediate (WTI) crude futures increased by 0.23% to $73.17 per barrel, down 3.03% for the week. Both benchmarks have reached their lowest levels since early January.
The recent drop in oil prices is attributed to disappointing U.S. economic data. Revised figures from the U.S. Department of Labor revealed that job additions were significantly lower than previously reported for the year ending in March. This revision has raised fears of a potential recession in the U.S., which could lead to reduced oil demand and contribute to the decline in oil prices.
However, ANZ Bank analysts believe that the market might be overreacting. They argue that the labor market slowdown is gradual rather than abrupt, suggesting that strong U.S. demand could still support oil prices. This perspective has somewhat eased market concerns about a sharp decline in demand.
Additionally, global oil storage levels have fallen over the past two months, indicating that oil prices might find support in the near term. Analysts are closely watching OPEC‘s next move. Although OPEC planned to increase production in the fourth quarter, this decision may be postponed due to persistently low oil prices to prevent further price drops.
The ceasefire negotiations in the Gaza Strip have also influenced the market. As the situation stabilizes, concerns about supply disruptions have diminished, which has also pressured oil prices.
Brent Crude Oil
Brent crude oil futures saw a significant rise yesterday, nearing the $78.00 mark. However, technical indicators suggest an overbought condition, and a negative trend may emerge. Analysts predict that Brent crude prices could enter a new bear market phase, targeting $75.78.
Today’s trading range is expected to be between $75.60 and $78.60, with a bearish trend forecasted. If prices surpass $77.75, they may test $78.80 before any potential decline.
WTI Crude Oil
WTI crude oil futures displayed a positive trend yesterday, reaching $74.45. However, the upward momentum has diminished, and the EMA50 moving average is exerting negative pressure. This suggests that WTI prices might resume their bearish trend, with a potential drop to the $72.04 support level.
Today, WTI crude oil is anticipated to trade between $72.00 and $75.00, with a bearish trend expected. A breakthrough of $74.20 could lead to additional gains and a test of $75.00 before a new decline attempt.
Future Outlook
The crude oil market faces continued challenges from weak demand and easing supply pressures. While short-term support for oil prices is possible, the upside potential remains limited amid growing macroeconomic uncertainties.
Traders should monitor OPEC’s future actions and global economic data, especially the U.S. labor market performance, as these factors will significantly impact crude oil prices in the coming weeks. Geopolitical risks, particularly developments in the Middle East, should also be closely watched.
Overall, while short-term rebounds in oil prices are possible, the market should remain cautious given the weak demand and a slowing global economy.