Crude Oil Dropped As Demand Worries Outweigh Mid-East Supply Risks
Crude oil faced a significant downturn, settling down by -2.82% at 6934, primarily driven by concerns surrounding higher US commercial inventories and weakening economic data from China, alongside diminished prospects of interest rate cuts, which collectively dampened global demand sentiment. The EIA Petroleum Status Report revealed a notable increase of 2.735 million barrels in US crude oil inventories for the week ending April 12, 2024, surpassing market expectations and signalling potential oversupply concerns. Despite decreases in gasoline and distillate stockpiles, the overall crude stockpile buildup contributed to market apprehensions.
Similarly, data from the API’s Weekly Statistical Bulletin echoed the trend of rising crude oil inventories, marking the second consecutive week of increases and the largest weekly gains in four weeks, further exacerbating supply-side worries. The IEA added to the bearish sentiment by trimming its forecast for 2024 oil demand growth, citing lower consumption in OECD countries and a slowdown in factory activity. The IEA’s downward revision underscores ongoing challenges to global oil demand recovery, particularly in the face of lingering uncertainties surrounding the pandemic’s impact on economic activity.
Technically, the market is undergoing long liquidation, with a substantial -30.63% drop in open interest to settle at 4452, accompanied by a significant price decline of -201 rupees. Currently, Crude oil finds support at 6859, with a potential downside test at 6783. On the upside, resistance is anticipated at 7063, with a breakthrough potentially leading to further testing at 7191. Traders should remain cautious amidst the prevailing bearish sentiment and monitor key support and resistance levels for potential trading opportunities.
That headline indicates that the price of crude oil went down recently, even though there are potential supply disruptions in the Middle East. Let’s break it down:
- Crude Oil Price Drop:Â The main point is that the price of crude oil has fallen.
- Demand Worries:Â The primary reason for the price drop is concern about weak demand for oil. This could be due to factors like a slowing global economy or a shift towards renewable energy sources.
- Mid-East Supply Risks:Â Despite potential supply disruptions in the Middle East, typically a reason for price increases, these worries haven’t been strong enough to outweigh the decrease in demand.
Here are some additional questions you might have:
- How much did the price drop? The article you likely read would mention the specific percentage or dollar amount the price fell by.
- What specific events are causing the demand worries? The article might elaborate on the reasons behind the weak demand outlook.
- What’s the situation in the Middle East? You might need to find a different news source to get details on the specific events causing supply risks in the Middle East.