Oil News: Fading Hurricane Threat and Weak China Demand Pressure Crude Prices

Crude Oil Slides on Technical Resistance and Fading Hurricane Threat

Light crude oil futures dropped sharply on Friday, facing strong technical resistance and weakening demand signals. As Hurricane Rafael’s threat to U.S. production diminished and demand indicators softened, the market’s attention shifted to critical technical levels and potential U.S. policy impacts under President-elect Donald Trump.

At 11:22 GMT, Light Crude Oil Futures are trading $71.31, down $1.05 or -1.45%.

Technical Resistance Signals Further Downside Risk

WTI crude faced firm rejection at the 200-day moving average of $73.17, setting up a resistance zone that has intensified selling pressure. Trading has now fallen below a major 50% retracement level at $71.63, which has become resistance. This bearish move suggests prices could soon test the 50-day moving average of $69.93, with a further drop toward a significant Fibonacci level at $69.21.

For traders, the market’s current position suggests a short-term bearish trend while prices stay below the 200-day moving average. However, a rangebound setup remains possible if prices stabilize between the 50% retracement and Fibonacci level.

Hurricane Rafael Impact Eases, Weighing on Prices

Concerns over potential production disruptions from Hurricane Rafael are abating, further pressuring oil prices. While Rafael initially led to a temporary shut-in of 391,214 barrels per day of U.S. crude production in the Gulf of Mexico, updated forecasts from the National Hurricane Center now project the storm weakening over the weekend. The risk of prolonged supply disruptions has therefore declined, shifting market focus away from supply risks and contributing to Friday’s selloff.

China’s Demand Concerns Deepen on Import Declines

Weaker demand from China, the world’s largest oil importer, is adding to bearish sentiment. October data revealed a 9% drop in Chinese crude imports, marking the sixth consecutive monthly year-over-year decline. This trend is intensifying concerns about sustained demand from Asia, a crucial factor for crude prices. With additional pressure from rising U.S. crude inventories, this slowdown in demand is curbing prospects for a sustained price rally.

Trump Administration’s Potential Supply Policy Influence

Traders are monitoring how the incoming Trump administration might impact oil supplies, particularly through sanctions on Iran and Venezuela. Tighter sanctions could limit these countries’ contributions to global supply, potentially supporting prices in the midterm. However, analysts at BMI, a Fitch Solutions unit, caution that any policy moves may be moderate or slowed by institutional constraints, limiting their immediate impact on market fundamentals.

Market Forecast: Bearish Short-Term Outlook on Technical and Demand Weakness

Given the technical breakdown below a key moving average and retracement level, easing hurricane risks, and signs of weakening demand, the crude oil market is likely to stay bearish in the near term. With further downside tests probable at $69.93 and $69.21, prices are expected to remain under pressure unless new bullish catalysts emerge. Traders should closely monitor shifts in demand indicators and any policy announcements from the U.S. that could influence the supply outlook.