Crude Price declined in early October
Oil price falls as the prospect of additional supplies from U.S strategic reserves assuaged market concerns of a tight market heading into Northern Hemisphere winter and the impact of China’s zero-Covid policy is on display in the downward slopes of its air travel, LNG imports, and crude inventories, energy as well as the prospect of additional supplies from strategic reserves assuaged market concerns of a tight market heading into Northern Hemisphere winter.
On Tuesday, West Texas Intermediate fell 3% to settle below $83 per barrel. As a way to lower fuel prices, the US is releasing more crude from its strategic reserves. crude prices declined in response to expectations that the Biden administration wants energy prices trending in the right direction, U.S will continue to release strategic oil reserves aggressively.
The US is moving toward a release of another 10 million to 15 million barrels of oil from the nation’s emergency stockpile, according to people familiar with the matter. Separately, the Biden administration is still weighing limits on exports of fuel as well.
Crude’s choppy trading in October has seen the market caught between two divergent factors. Despite OPEC+ output cuts beginning next month, key market indicators, such as time spreads, indicate tightening before OPEC+ output cuts begin. However, bearish drivers such as weak Chinese demand and aggressive monetary policy continue to drag on the market.
There are also looming sanctions against Russia by the European Union, and some Indian refiners are halting spot purchases of the country’s crude.
Prices have fallen by about a third since early June, erasing all the gains made after Russia’s late-February invasion of Ukraine. EU sanctions on Moscow’s oil trading are set to take effect from December, prompting traders and refiners to book storage tanks in anticipation of a supply crunch.
Technical analysis indicates that oil is in the bearish trend since early October. Trend trading scenario, oil investors might place sell orders at $83.5 putting stop-loss at 86 and taking profit at $80 a barrel.