Crude Oil Analysis
Afternoon: Crude Oil Slips Below $70 as Supply and Demand Concerns Intensify
Highlights:
- Crude oil fell below $70 due to rising supply concerns and weak demand outlook.
- Libya's potential oil production resumption could add 500,000 barrels/day to the market.
- OPEC's planned Q4 output increase and China's economic slowdown weigh on prices.
Overview:
Crude oil prices have fallen below $70 per barrel, reaching their lowest point since December 2023. This decline is primarily driven by a combination of rising supply concerns and a bleak demand outlook in major economies. A key factor contributing to the drop in oil prices is the potential resolution of political tensions in Libya, where competing administrations appear to be nearing an agreement that would allow the resumption of oil production. Should this agreement be finalized, it could result in an additional 500,000 barrels per day entering the market, exacerbating the current oversupply situation.
Adding to the downward pressure, OPEC has signaled plans to increase oil output in the fourth quarter of the year. This decision comes at a time when demand remains uncertain, particularly in major oil-consuming nations like China. Recent economic data from China has heightened concerns, as key indicators of factory demand showed a significant decline in August. This downturn suggests that China's economic growth may not recover as expected, further dampening global oil demand.
Key Takeaways:
- Libya's potential return to oil production could add 500,000 barrels/day to the market, intensifying supply concerns.
- OPEC's plan to boost output in Q4 comes amid growing worries about weak demand in major economies, especially China.
Upcoming Economic Data:
- Spanish Services PMI and German Final Services PMI from the Euro Zone.
- JOLTS Job Openings and Factory Orders m/m from the US Zone.
Action: Sell on jump from 71$ targeting 68.50$ which invalidates above 72.40$
Support and Resistance Levels:
