Oil News: U.S. Crude Exports Set to Plateau Amid Weak Oil Demand from China

Oil Prices Steady as Market Tests Key Support Levels

Light crude oil futures are seeing modest gains on Wednesday, testing critical support between $73.43 and $71.02. This comes as bullish traders attempt to halt a steep sell-off that drove prices from $78.98 on August 12 to $72.54 on August 20. The market has recorded losses in five of the last six trading sessions, reflecting significant downward pressure.

At 11:39 GMT, Light Crude Oil Futures are trading $73.25, up $0.08 or +0.11%.

Demand Concerns and Middle East Tensions Influence Prices

Oil prices have stabilized after a series of declines that brought Brent crude down to around $77, fueled by persistent concerns over Chinese demand and reduced fears of escalating conflict in the Middle East. Since peaking above $82 early last week, Brent has dropped 6.2%, closing at $77.20 on Tuesday, while West Texas Intermediate (WTI) fell 7.5% in the same period.

The demand outlook from China, the world’s largest crude importer, remains a key bearish factor, alongside easing tensions in the Middle East. Additionally, the American Petroleum Institute (API) reported an increase in U.S. crude stocks last week, although gasoline and distillate inventories declined, hinting at an imbalance that could exert downward pressure on prices.

U.S. Oil Exports Set to Plateau Amid Tepid Demand

The growth in U.S. crude oil exports is expected to plateau in 2024, marking a shift from the robust expansion seen in previous years. With domestic production forecast to rise by only 2.3%, the smallest increase since the pandemic, and global demand, particularly from Asia, remaining sluggish, the outlook for U.S. export growth is muted. Notably, U.S. exports to China have declined significantly, and the overall growth in exports this year stands at just 3.5%, the lowest since 2015.

Market Forecast: Bearish Outlook in the Short Term

Given the weak demand signals from China, rising U.S. crude inventories, and the expected plateau in U.S. exports, the crude oil market faces a bearish outlook in the near term. Prices may continue to struggle as supply concerns ease and demand remains subdued. Traders should monitor the upcoming U.S. inventory data and developments in the Middle East for further price direction.

Technical Analysis

Light crude oil futures are marginally higher on Wednesday as the market straddles the top of a key support zone at $73.43 to $71.02. The market is inside yesterday’s trading range, which suggests investor indecision or impending volatility.

The signal could also be indicating a potential shift in direction although not a change in the trend. However, recapturing the 200-day moving average at $74.24 could trigger a quick short-covering rally.