Russia is tightening its grip on Iraqi oil production as its influence in Kurdistan weakens. India made its first crude oil payment in rupees rather than USD. But the biggest oil news from US mainstream financial channels is China’s recent economic woes. Are oil prices so reliant on the Chinese economy, or is it just a temporary dip creating a buyers’ market? On the charts, oil prices have been trading in an aggressive bullish rally for the last 2 months and now show some signs of a momentum cool-down. If the price breaks below $80.30, which is at the 23.6% level of the daily Fibonacci retracement, then the next level of support could be found at $77.80. It doesn’t look good for OPEC and the other oil exporters this week.
The Chinese economy has been taking a bashing from American media channels for a few days, and this ‘sentiment killer’ is said to be the cause of the 4.65% dip from $84.92 (USD) to $80.98 over the last 6 days. But traders should be cautious about this assumption. Despite the China connection being reported by legitimate news sources, traders might be wise to explore other influences for the dip.
Increased competition with India for cheap Russian oil has pushed China to boost its imports from Iran, adding 1.5 million barrels per day to the ledger, which is forecasted to reach a 10-year high next month. So China’s oil demand is high and rising, not falling. As with most assets, high demand usually influences prices in a bullish direction. How one nation's economic status could affect oil prices when its demand is high is not being reported in detail at this time. We recommend that traders follow all oil stories on the Exness Trade app and expand news sources to include European and Asian channels alongside US media. Here’s what The Wall Street Journal is reporting on oil right now.
Crude Oil Steady as Worries Over China Demand Hit Sentiment
Crude oil prices are steady following a slip on Tuesday, with worries over Chinese demand outweighing supply tightness concerns. Brent crude and WTI are both flat, at $84.92 a barrel and $80.98 a barrel, respectively. “Concerns that China’s faltering economy will weigh on demand offset tight supply in the oil market,” ANZ says in a note. Markets are in a “risk-off” mood, with Brent falling below $85 a barrel, the bank’s analysts say. This is despite tight supply with oil inventories in Cushing, a global hub for oil, falling to their lowest level since April, according to ANZ.
“Asian refineries are also snapping up all available U.S. cargoes of oil. Rongsheng Petrochemical Co secured millions of barrels from the spot market last week.”
