OIL Price Declines amid Demand Concern
Oil price was bullish after Saudi Arabia responded to Bloomberg on the possibility of OPEC+ cutting production in order to stabilize the volatile future market. The market started to bounce from $86.27 to Tuesday’s high of 97.62 a barrel.
The market declined again on the concern that tighter monetary policy and China’s economic slowdown plus covid-19 outbreak again from ShenZhen to Dalian which caused a lockdown in many cities.
It summarizes August’s overall sentiment, in which rising central bank interest rates are seen as a brake on oil demand growth. According to the latest Energy Information Administration report, oil prices are declining even as US supply has turned bullish, with crude stockpiles dropping for a third week while inventories at the largest storage hub fell for the first time in two months.
While there has been significant unrest in both Libya and Iraq in recent days, oil output in both OPEC members appears to be unaffected so far. Separately, talks to revive an Iranian nuclear deal that may unlock greater crude exports have dragged on, and Russian output has been maintained at levels higher than prior expectations
Technical analysis indicates that oil price is in a bearish trend starting from this week’s high of $97.62 to Wednesday’s low of $88.23 a barrel. Oil investors may place a sell trade order at $90, setting a stop loss function at $93.5 and a take-profit at $85.5.