Oil Prices Decline Amid Sluggish US Demand and Rising Supply

Fundamental Analysis

* Energy Ebb: Crude oil prices have dropped due to an unexpected rise in U.S. stockpiles, raising concerns about weak demand from the world’s largest oil consumer. The U.S. Energy Information Administration (EIA) reported a 3.6-million-barrel increase in the country’s crude oil stocks last week, surprising analysts surveyed by Reuters who had expected a 2.9-million-barrel decrease. Additionally, motor gasoline product supplied, an indicator of demand, fell by around 417,000 barrels per day last week, reaching 8.97 million bpd. The four-week average demand is about 2% lower than last year’s levels. Despite the peak summer driving season, demand has not significantly reduced U.S. crude supply, 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.

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

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

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