Oil Prices Drop Amid Concerns Over China’s Demand

Fundamental Analysis

* Demand Drag: Crude oil prices fell further from the previous session due to concerns about weakening demand from China, the largest global oil consumer. Data showed an 11% decline in China’s total fuel oil imports in the first half of 2024 amid slow growth. Additionally, disappointing economic reports, including a third consecutive month of declining manufacturing activity in China in July, have added pressure to oil prices. Compounding the issue, news of the Dangote oil refinery in Nigeria reselling U.S. and Nigerian crude following technical issues has also contributed to the price drop.

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.

Potential Risks

Moving ahead, 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 Xtrader’s financial news page.

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