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Oil Prices End 3% Lower on Friday s Risk-Off Sentiment Prevails

Crude oil prices fell sharply on Friday, registering a significant loss of over 3%, as concerns about the health of the global economy weigh

Skerdian Meta•Saturday, July 20, 2024•2 min read
US WTI Oil Daily Chart

Crude oil prices fell sharply on Friday, registering a significant loss of over 3%, as concerns about the health of the global economy outweighed renewed worries about lower Q3 supplies. Benchmark US crude oil for August delivery dropped by $2.70 to settle at $80.13 per barrel. Meanwhile, Brent crude for September delivery decreased by $2.50, closing at $82.63/barrel.

WTI Crude Oil Chart Daily – The Decline Stalled at the 200 SMA

Oil Prices Show Volatility Amid Market Trends

Oil prices saw a significant rise in June but have since weakened in July. Despite the drop, moving averages have held firm. Brent oil futures and US West Texas Intermediate (WTI) crude oil experienced a rise supported by several factors: geopolitical tensions in the Middle East, a weakening dollar, expectations of US interest rate cuts, and robust crude demand during the busy summer travel season. These elements significantly boosted oil markets.

Market De-Risking and Oil Price Decline

However, these supportive factors are not currently aiding oil prices as markets enter a de-risking phase. The decrease in EIA inventory this week briefly halted the decline, resulting in a $2 rise in WTI crude oil on Wednesday. Despite this, Thursday’s doji candlestick suggested a bearish reversal, leading to a 3% drop in WTI prices yesterday, falling below $79.

July Decline As Global Landscape Deteriorate

In June, oil prices increased by more than $10, peaking at $84. However, they reversed course in early July, dropping below $80 this week. Friday’s market movements suggest a potential bearish trend in oil prices as the global economy faces challenges.

The oil market is facing significant pressure. The macroeconomic fundamentals are worsening, and hopes for Chinese intervention are dwindling. Concurrently, data from Russia and OPEC indicate an unexpected decrease in shipments. Intraday, crude remains within its current range, but it’s only the 200 daily SMA holding it up. Next week, we will look at China for any post-plenum stimulus plans, although expectations are low. In the absence of Chinese action, focus will turn to US GDP figures and regular inventory reports, which have been positive so far.

WTI Crude Oil Live Chart

WTI
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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