Crude Oil Price Forecast: WTI Supported by 50-Day EMA, Eyes $72 Resistance

Crude oil prices are facing headwinds as global demand, particularly from China, falls short of expectations. According to Commerzbank, China’s post-pandemic demand recovery has stalled, significantly impacting global oil markets.

The International Energy Agency (IEA) has revised its demand growth forecast for China to just 180,000 barrels per day (b/d) this year, down from earlier projections. Global demand is also expected to rise at a slower pace of 900,000 b/d, with China contributing only 20% of that growth.

China’s Oil Demand Slows, Dampening Global Outlook

China, once the key driver of global oil demand, is now acting as a drag on the market. The IEA recently lowered its forecast for China’s oil demand growth to just 180,000 b/d for 2024. This marks a significant shift from previous years when China was a major contributor to global energy consumption. From April to July, China’s oil demand was lower than in 2023, further fueling concerns about the country’s sluggish economic recovery.

Oil down amid China's slowing demand, OPEC+ supply boost
OPEC+ previously agreed to extend oil production cuts to November as crude oil and fuel prices continued to fall#News #DailyNews #LiveNews #WorldNews#World pic.twitter.com/X1rFrQBwTp

— Breaking News (@FastNews77) September 20, 2024

Recent data from August confirms that China’s crude oil processing levels remain weak, showing no signs of improvement. As a result, the IEA expects global oil demand to increase by only 900,000 b/d, with China’s share of that growth shrinking. Looking ahead, China’s oil demand is projected to rise by 260,000 b/d in 2025, but this is still far below earlier forecasts, limiting the outlook for the global oil market.

Global Oil Demand Growth Remains Muted

The broader outlook for global oil demand is similarly subdued. The IEA now expects demand to rise by 954,000 b/d in 2025, down from previous forecasts of around 1.1 to 1.2 million b/d. This downward revision reflects weaker economic activity and slower-than-expected recoveries in key markets, including Europe and China. The reduced demand expectations add pressure to crude oil prices, even as geopolitical tensions and production cuts continue to offer some support.

Despite these challenges, the market remains cautiously optimistic, with OPEC and its allies implementing supply cuts to balance the market. However, the effectiveness of these cuts in boosting prices will depend largely on whether demand from China and other major economies picks up in the coming months.

Crude Oil Technical Outlook: Key Levels to Watch

WTI Crude Oil is currently trading at $70.77, showing resilience within its upward channel. The 50-day Exponential Moving Average (EMA) at $69.81 is providing crucial support, helping to maintain a mildly bullish momentum. Immediate resistance is seen at $71.84, with further resistance levels at $72.89 and $74.11. On the downside, support is noted at $69.30, with a key level at $67.55 that could come into play if sentiment shifts.

• Immediate Resistance: $71.84
• Next Resistance Levels: $72.89 and $74.11
• Key Support Levels: $69.81, $69.30, and $67.55

🔻 Global Oil Refining Profits Plunge to Multi-Year Lows: Refiners across Asia, Europe, and the U.S. are seeing a sharp drop in profitability 📉 as global demand weakens. Factors include China's slowing economy, rising EV penetration, and new refineries in Africa, the Middle… pic.twitter.com/Bm7ObOh99b

— LWS Financial Research (@lwsresearch) September 20, 2024

The Relative Strength Index (RSI) is currently at 57.66, indicating mild bullish momentum with room for consolidation. If WTI manages to break above $71.84, it could target the next resistance at $72.89. However, a fall below $70 could signal a shift in market sentiment, potentially leading to a test of the $67.55 support level.

Key Insights:

• WTI Crude is supported by the 50-day EMA at $69.81, sustaining its bullish momentum.
• Immediate resistance at $71.84 could lead to further gains toward $72.89 if broken.
• RSI at 57.66 suggests mild bullish momentum with the potential for consolidation.

The crude oil market remains in a delicate balance, with weak demand growth weighing on prices, but technical factors providing near-term support.