WTI Crude Oil Price Forecast: Hurricane Francine Disruption & OPEC Demand Cuts to Weigh on $66.88 Price

WTI Crude Oil is currently trading at $66.88, attempting to recover after a sharp decline earlier in the week. Concerns about Hurricane Francine’s disruption of oil output in the Gulf of Mexico have provided some support for prices.

According to the U.S. Bureau of Safety and Environmental Enforcement (BSEE), approximately 24% of crude oil production and 26% of natural gas output in the Gulf were offline due to the storm, amplifying supply concerns.

Key Takeaways:

• Hurricane Francine disrupts 24% of U.S. crude production, temporarily supporting prices.
• OPEC revises oil demand forecasts downward, adding bearish pressure.
• WTI Crude faces strong resistance at $67.54, with potential downside if not breached.

Despite these disruptions, the broader outlook remains cautious as the hurricane’s temporary impact on supply is being weighed against longer-term demand concerns. Both the U.S. and China, the world’s largest consumers of oil, face economic slowdowns, which could limit demand growth in the coming months.

Economist Yuki Takashima of Nomura Securities noted, “Downward pressure will likely continue as investors remain worried about the economic slowdown in China and the U.S.” Takashima revised his forecast for WTI to $60-$80 for the rest of the year, reflecting these concerns.

OPEC’s Demand Revisions and Inventory Data

On the demand side, the Organization of the Petroleum Exporting Countries (OPEC) recently cut its global oil demand forecast. OPEC now expects oil demand to rise by 2.03 million barrels per day (bpd) in 2024, a reduction from its previous forecast of 2.11 million bpd. OPEC also revised its 2025 demand growth estimate down to 1.74 million bpd, further fueling bearish sentiment.

In contrast, the U.S. Energy Information Administration (EIA) offered a more optimistic view, reporting that global oil demand is set to grow to record levels this year, though output growth will be slower than expected. U.S. crude inventories have also shown bullish signs, with stocks falling by 2.793 million barrels in the week ending September 6, surpassing analyst expectations.

However, it’s worth noting that China’s crude oil imports have risen to their highest levels in a year, but are still 7% lower than the same period last year. This mixed data has added to market uncertainty, with some analysts predicting continued bearish sentiment due to the slow recovery in demand, particularly from China.

Crude oil $WTI is on the verge of breaking a very large spot. Sitting at a 3-year low 📉

OPEC+ cutting the demand outlook is another signal that’s leaning toward recession… sadly pic.twitter.com/epMCIWTUaa

— ad_investing22 (@ad_investing22) September 10, 2024

Technical Outlook for WTI Crude Oil

From a technical perspective, WTI Crude Oil is trading within a well-defined downward channel, facing significant resistance at the $67.54 pivot point. A break above this level could pave the way for a bullish move, with subsequent resistance levels at $68.82, $70.08, and $71.27. These levels are critical for any potential recovery in WTI’s price.

However, the market remains under pressure. If WTI fails to break above $67.54, selling pressure may intensify, bringing the price down to test key support levels at $65.25, followed by $64.08 and $63.05. The 50-day Exponential Moving Average (EMA) at $68.21 is also adding resistance, reinforcing the bearish trend.

The Relative Strength Index (RSI) stands at 44.10, suggesting a neutral to slightly bearish sentiment. This indicates that the market has more room to fall without entering oversold territory. The alignment of technical indicators with the broader downward trend suggests that WTI Crude Oil is at a crucial juncture.

Conclusion

In summary, while short-term disruptions like Hurricane Francine have provided some support for WTI Crude Oil, the overall market sentiment remains bearish due to weak global demand. With OPEC cutting its demand forecasts and China’s economic recovery slower than expected, the pressure on oil prices is likely to persist. From a technical standpoint, WTI Crude Oil must break above the $67.54 pivot to signal a potential recovery, but failure to do so could lead to further declines, with support at $65.25 and below.