Nasdaq Reverses 2% Higher, Oil Prices $2 Up But Trends Lower

Although oil prices have rebounded by $2 from their recent lows, the broader trend remains negative. Global economic weaknesses, especially in China, are weighing heavily on the market. China’s inflation declined in August, sparking concerns about its economy, which is particularly alarming given that China is the largest oil importer in the world. This has added to the selling pressure on crude oil.

Yesterday, US WTI crude oil prices fell below $65 but managed to bounce back to $67 today, as the Gulf of Mexico shut down operations in anticipation of an approaching hurricane. Despite OPEC+ delaying its planned October output increase due to weakening global demand, this has not been enough to curb the bearish sentiment. China’s domestic demand remains fragile, as recent economic data showed only a slight increase in consumer inflation for August. This lack of robust demand is contributing to the ongoing pressure on oil prices, with traders continuing to doubt any significant near-term recovery.

Crude Oil Chart H4 – MAs Keeping the Trend Bearish

Meanwhile, the NASDAQ index experienced a significant drop of 238.04 points earlier in today’s session but has since reversed that loss, rising by 244.18 points or 1.43%. This marks a complete turnaround, as the index climbed back above its 100-day moving average of 17,158.57, a positive technical sign. The next key target is the 50-day moving average, sitting at 17,528.67, which could provide further upside if breached.

Nasdaq Chart Daily – Testing the 100 SMA

Hurricane Francine, a Category 1 storm with winds reaching 90 mph, has forced the shutdown of around 40% of oil production in the Gulf of Mexico as it approaches the Louisiana coastline. This disruption adds further complexity to an already tense oil market, particularly with global economic uncertainty weighing on energy demand.

EIA Weekly Oil Inventory Report

• Crude Oil: +0.833M barrels (below the 0.987M estimate)
• Gasoline: +2.310M barrels (significantly higher than the -0.109M estimate)
• Distillates: +2.308M barrels (well above the 0.313M estimate)

Additional details:

• Cushing: -1.704M barrels (a larger draw compared to last week’s -1.142M)
• Refining Utilization: -0.5% (slightly better than the expected -0.7%)
• Crude Production: Remained steady at 13.3M barrels, unchanged from the previous week.

These figures suggest that despite production disruptions due to the hurricane, inventories for gasoline and distillates are building up, likely reflecting a drop in demand or logistical adjustments. The slight reduction in refining utilization signals a softening in refinery output amid these disruptions.

US WTI Crude Oil Live Chart