Oil News: Crude Oil Prices Slide as Bearish Sentiment Takes Hold – Key Levels Broken

Crude Oil Prices Remain Under Pressure Amid Bearish Sentiment

Light crude oil futures fell on Wednesday, extending losses from the previous session as prices plunged to their lowest level since February 8. The market continues to trend downward, with key support levels at $71.46, $70.50, and $69.50 being broken, signaling further weakness in oil prices.

The 52-week range for crude oil stands between $63.21 and $83.66, but prices are now trading below significant technical levels. The market is struggling under the 50% to 61.8% Fibonacci retracement zone ($73.44 to $71.02), and both the 200-day and 50-day moving averages are acting as resistance, at $74.26 and $76.45, respectively.

At 10:26 GMT, Light Crude Oil futures are trading $69.42, down $0.42 or -0.60%.

Libyan Oil Developments and Global Supply

Despite bearish momentum, traders remain cautious about potential supply disruptions. Reports of a possible resolution to Libya’s political turmoil have triggered a sell-off. Libya’s legislative bodies reached an agreement to appoint a new central bank governor within 30 days, potentially leading to the resumption of crude exports. Libya’s oil production has been severely impacted, dropping from 1.28 million barrels per day (bpd) in July to just 591,000 bpd as of August 28. The resumption of Libyan oil exports could bring additional supply to the market, adding further pressure on prices.

In contrast, news of ongoing attacks on oil tankers in the Red Sea, attributed to the Houthi group in Yemen, was largely ignored by traders. Although the attacks emphasize the risk of further disruptions, the market remains focused on bearish developments.

Weak Demand Outlook Weighs on Prices

The global demand outlook continues to drag on oil prices. Weak economic data from China, the world’s largest oil importer, and the U.S. have raised concerns about sluggish fuel demand. China’s manufacturing activity hit a six-month low in August, and the U.S. Institute for Supply Management’s report showed subdued factory output. Although China’s oil imports rebounded in August to 11.02 million bpd from July’s 9.97 million bpd, the overall demand picture remains weak for the first eight months of the year.

Additionally, OPEC’s production fell to 26.36 million bpd in August, driven mainly by the decline in Libyan output. Despite this reduction, oil prices have not responded positively, as investors are more focused on demand concerns rather than supply disruptions. Further supply increases, such as the planned OPEC+ production hike in October, could add downward pressure on prices.

Market Forecast

In the short term, the outlook for crude oil remains bearish. Prices are trading below key technical levels, and negative sentiment around demand from China and the U.S. dominates market movements. While potential developments in Libya may temporarily halt the price decline, they are unlikely to reverse the broader downtrend. Traders should watch for any unexpected developments from OPEC+ or geopolitical events that could trigger a short squeeze, but for now, the market remains vulnerable to further downside risk.