Crude Oil Price Stabilizes at $78.45 Amid Supply and Demand Uncertainties

Crude oil prices found a modest footing this Tuesday, levelling after a decline across two consecutive sessions. Investors tread carefully, influenced by projections of ample supplies coupled with subdued demand, essentially overlooking shifts in the U.S. political scene.

West Texas Intermediate (WTI) crude for September delivery inched up by $0.05 to $78.45 per barrel, while Brent crude futures for the same month ascended by $0.11 to $82.51 a barrel.

Brent oil futures for September delivery rose 0.53% to $83.07 per barrel, while West Texas Intermediate (WTI) crude futures rose 0.51% to $80.54 per barrel as of 5:19 GMT. Read more https://t.co/Cg1JG1YqOv#Oil #Oilprices pic.twitter.com/dlHORXv9oP

— Economy Middle East (@Economy_ME) July 22, 2024

Market Focus Shifts from U.S. Politics to Fundamental Supply Concerns

Despite the political waves caused by President Joe Biden’s recent withdrawal from the 2024 presidential race and subsequent endorsement of Vice President Kamala Harris, market participants have largely diverted their attention back to fundamental industry metrics.

Biden's Withdrawal and the Impact on "Trump Trades" The recent announcement of President Joe Biden's withdrawal from the 2024 presidential race has created ripples in the financial markets. https://t.co/x7pkgYtlYo #IncomeTaxReturn #BTC pic.twitter.com/qhs8uXUyGg

— The Early Ones (@Giwa_e_e) July 23, 2024

Analysts from Citi have expressed that the forthcoming election outcomes—be it under Harris or Trump—are unlikely to drastically alter policies impacting the oil and gas sectors.

Morgan Stanley analysts anticipate that market fundamentals are poised to stabilize by the fourth quarter, projecting an eventual surplus in supply by the next year, potentially pushing Brent prices down into the mid-to-high $70s per barrel.

Inventory Levels and International Incidents Affecting Crude Outlook

This week, the oil market braces for the American Petroleum Institute’s latest inventory report, with early estimates suggesting a decline of 2.5 million barrels in U.S. crude stocks.

Attention is also on the global stage where the Tuapse refinery, Russia’s largest on the Black Sea, suffered damages from a Ukrainian drone strike.

Such international tensions and subsequent disruptions underscore a complex global supply chain, affecting refined product prices and potentially increasing the availability of crude for export, as noted by ING strategists.

This intricate interplay of supply assessments, geopolitical developments, and subtle shifts in investor sentiment underscores the delicate balance within the crude oil market, reinforcing the need for vigilant analysis and strategic foresight in forecasting US oil prices.

Crude Oil Price Forecast

WTI Crude Oil is currently priced at $78.43, experiencing a slight increase of 0.24%. As it oscillates within a defined channel, the oil market displays a mix of volatility and tentative recovery.

The immediate resistance lies at $79.11, with further barriers at $80.22 and $80.53, indicating a potential ceiling for short-term bullish movements.

On the downside, support can be found at $77.56, followed by more substantial levels at $76.43 and $75.20, which could act as buffers against further declines.

The Relative Strength Index (RSI) is currently at 36.42, suggesting that the commodity is nearing oversold conditions but has not fully reached a bullish trigger point yet.

The 50-day Exponential Moving Average (EMA) stands at $80.53, providing a resistance level above the current price, indicating that the market might struggle to sustain upward momentum in the near term.

Given the current market conditions and technical setup, traders might consider a cautious approach.

The strategy would involve selling below the $79.10 pivot point to capitalize on potential downturns, with a close monitoring of the $77.56 support level for any bullish reversals. As always, maintaining a stop loss at $79.11 could help mitigate risks associated with unexpected market movements.