Oil News: Bearish Oil Outlook as Futures Eye $65.75 Amid Lower Global Demand

Oil Prices Edge Lower as Key Support Levels Threatened

Light crude oil futures declined on Friday, hovering near the critical Fibonacci support level at $69.21. This support had held throughout the week, but with increased downside momentum, a breach could lead to further declines, potentially targeting the October 1 low of $65.75. On the upside, the 50-day moving average, currently at $70.91, serves as the nearest resistance.

The broader technical outlook indicates a bearish market sentiment. The retracement zone between $71.63 and $69.21 is seen as controlling the market’s direction, while trading below both the 50-day and 200-day moving averages adds to the downside pressure.

At 11:01 GMT, Light Crude Oil Futures are trading $69.68, down $0.41 or -0.58%.

Weekly Losses Amid Lower Demand Projections

Despite holding steady on Friday, oil futures are set to record their largest weekly loss in over a month. Both Brent and WTI are on track for a roughly 6% decline this week, the steepest since early September. This drop follows demand forecast revisions from OPEC and the International Energy Agency (IEA), which lowered their global oil demand outlooks for 2024 and 2025.

Concerns about potential disruptions in oil supply due to Middle East tensions have also subsided. Fears of an Israeli retaliation against Iran, which could impact Tehran’s oil exports, have eased, reducing geopolitical risk premiums in the market.

U.S. Data and Chinese Stimulus in Focus

On the macroeconomic front, positive U.S. retail sales data for September has alleviated some concerns about growth, though traders are still anticipating a Federal Reserve rate cut in November. Meanwhile, the U.S. Energy Information Administration (EIA) reported declines in crude oil, gasoline, and distillate inventories, providing some support to oil prices.

In China, recent stimulus measures by the central bank, including two new funding schemes injecting 800 billion yuan ($112.38 billion) into markets, have sparked hope for demand recovery. However, third-quarter economic growth data was weak, with lower refinery output due to sluggish fuel consumption and narrow refining margins.

Middle East Tensions Continue to Weigh on Markets

Despite easing supply fears, concerns remain over potential price volatility as tensions escalate in the Middle East. Hezbollah announced it was intensifying its conflict with Israel following the death of Hamas leader Yahya Sinwar, fueling uncertainty about future supply disruptions.

Market Forecast: Bearish Outlook

Given the weak technical setup, downward pressure on oil prices is expected to persist. Trading below key support levels and moving averages, combined with reduced demand forecasts, suggests a bearish outlook for the near term. Traders should watch for potential price moves below $69.21, which could trigger further declines towards the $65.75 level.