WTI Crude Oil at $79.50: Market Caution on Global Demand Amid Increased Supplies

Oil prices declined during Asian trading on Tuesday following gains in the previous session. This reflected market caution regarding global demand growth amid expectations of increased supplies.

WTI

On Monday, both WTI and Brent benchmarks rose approximately 2%, closing at their highest levels since April.

U.S. Inventory Levels and Global Demand Concerns

Bank of America commodity strategist Francisco Blanch noted that the oil market has shifted its attention back to fundamentals, highlighting elevated global crude oil inventories and refined product storage, particularly in the United States and Singapore.

Blanch emphasized that global oil demand growth slowed to 890,000 barrels per day year-on-year in the first quarter, with indications of further deceleration in the second quarter.

China’s Refinery Output and Interest Rate Speculations

In May, China’s oil refinery output fell by 1.8% compared to the previous year, due to planned maintenance and rising crude costs impacting processing margins, according to statistics bureau data.

Additionally, markets are keenly observing upcoming statements from several U.S. Federal Reserve representatives on Tuesday, seeking insights on interest rates and U.S. demand conditions.

OPEC+ Supply Cuts and Market Sentiment

Analysts remain optimistic about the price impact of OPEC+ extending supply cuts. Patricio Valdivieso of Rystad Energy pointed out that the group’s guidance, coupled with their stable 2.25 million barrels per day demand growth outlook, suggests limited oil supply growth in 2024 and potential production risks in 2025.

This outlook, contrasted with other agencies’ forecasts, supports a less bearish stance on oil prices.

Investor sentiment has improved since OPEC+’s announcement of production increases starting in October, with hedge funds and money managers purchasing the equivalent of 80 million barrels in major petroleum futures and options contracts by June 11, reversing 40% of the sales that occurred after the initial announcement.

Supportive Refining Margins

Neil Crosby, an analyst at Sparta Commodities, noted that recent improvements in refining margins, particularly in Europe and Asia, have bolstered market confidence.

For instance, refining margins at a typical complex refinery in Singapore averaged $3.60 per barrel in June, up from $2.66 per barrel in May.

In summary, the WTI Crude Oil price forecast remains influenced by global demand and supply dynamics, U.S. inventory levels, and OPEC+ production strategies.

Market participants are advised to monitor these developments closely for informed trading decisions.

WTI Crude Oil Price Forecast

WTI Crude Oil is currently trading at $79.55. The pivot point, indicated by the green line, is at $79.24, serving as a critical balance level. Immediate resistance is seen at $80.59, with subsequent resistance levels at $81.35 and $82.09. These resistance levels are key hurdles for any further upward movement in oil prices.

WTI

On the downside, immediate support is found at $77.81. If this level is breached, the next support levels are at $76.68 and $75.78. The Relative Strength Index (RSI) is at 57.56, indicating moderate momentum.

The 50-day Exponential Moving Average (EMA) at $77.81 is currently providing significant support, suggesting potential buying interest.

The presence of an upward channel reinforces the likelihood of a continued uptrend, especially if prices remain above the pivot point of $79.24. Overall, the outlook for WTI Crude Oil remains bullish above this key level.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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