Oil News: Traders Eye US Inventory Data as Crude Oil Futures Hover Near Key Support

Oil Prices Flat as Traders Await US Inventory Data and Middle East Developments

Light Crude Oil futures are trading inside a critical retracement zone between $72.21 and $69.79. This range will likely define the market’s short-term direction, with a break above $72.21 signaling buying interest and a drop below $69.79 leading to renewed selling pressure. The market bias remains bearish, as prices are currently below both the 50-day moving average ($71.55) and the 200-day moving average ($73.46), pointing to weakness in both intermediate and long-term trends.

At 09:19 GMT, Light Crude Oil Futures are trading $70.58, up $0.19 or +0.27%.

OPEC Cuts Demand Forecast as Oil Prices Slip

Brent and U.S. West Texas Intermediate (WTI) crude both fell to their lowest levels since early October, driven by OPEC’s downward revision of global oil demand forecasts for 2024 and 2025. This is the third consecutive time OPEC has cut its demand growth projections, with the 2024 estimate now lowered to 1.93 million barrels per day (bpd) from 2.03 million bpd.

The downgrade is largely due to China’s slowing economy, as OPEC trimmed China’s demand growth forecast from 650,000 bpd to 580,000 bpd. Weak economic activity and shifts to cleaner fuels like liquefied natural gas (LNG) are expected to weigh on Chinese demand into the end of the year.

Libya, Iraq, and Russia Reduce Oil Output

OPEC+ production dropped in September, with a decline of 557,000 bpd largely due to unrest in Libya and a 155,000 bpd cut from Iraq, which pumped 4.11 million bpd. Russia also reduced output by 28,000 bpd, bringing its total to about 9 million bpd. Despite these cuts, the International Energy Agency (IEA) projects a substantial oil surplus in 2024, driven by non-OPEC production increases in countries like the U.S., Canada, and Brazil.

The IEA forecasts global demand growth at just 900,000 bpd in 2024, much lower than OPEC’s estimate of 1.93 million bpd, underscoring a divide in expectations.

US Inventory Data and Rate Decisions in Focus

Markets are awaiting the U.S. Energy Information Administration’s (EIA) inventory report, due today at 15:00 GMT, after preliminary data from the American Petroleum Institute (API) showed a decline in crude stocks last week. If confirmed, this could signal stronger demand and provide some short-term support for prices.

Additionally, U.S. jobless claims data and the European Central Bank’s rate decision are key economic factors. A potential ECB rate cut could offer economic stimulus, potentially boosting oil demand.

Market Forecast: Bearish Bias Likely to Persist

Given the lowered demand forecasts from OPEC and the IEA, coupled with bearish technical indicators, the near-term outlook for oil prices remains negative. Further downside is likely unless U.S. inventory data shows strong demand or geopolitical risks in the Middle East intensify. However, any bullish factors may provide only temporary price support in the coming sessions.