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Oil Prices Fall as Global Production Rises and Demand Slows – Is $66 Next?

Arslan Butt•Thursday, November 14, 2024•2 min read

Oil markets began Thursday trading on a downward trend, as rising production levels clash with tepid demand, particularly in key regions like China and India.

WTI Crude Oil, which had initially made gains, faced pressure from the strengthened U.S. dollar and concerns of oversupply. According to Priyanka Sachdeva, senior market analyst at Phillip Nova, OPEC’s decision to hold back on reducing production levels was based on fears of adverse price effects.

The Organization of the Petroleum Exporting Countries (OPEC) recently adjusted its forecast for global oil demand growth, reducing it to 1.82 million barrels per day (bpd) in 2024, a slight dip from its previous 1.93 million bpd forecast. The slowdown reflects lower-than-expected demand from major importers, including China and India. This drop brought WTI prices to their lowest point in nearly two weeks.

EIA’s Rising Production Forecast Fuels Bearish Sentiment

While OPEC’s outlook suggests constrained demand, the U.S. Energy Information Administration (EIA) has raised its own production forecasts. U.S. oil output is now expected to reach an average of 13.23 million bpd in 2024, up 300,000 bpd from last year’s record of 12.93 million bpd. Similarly, the EIA lifted its global production outlook to 102.6 million bpd for 2024, with further increases anticipated in 2025.

  • U.S. Output Forecast: 13.23 million bpd for 2024, up from the previous 13.22 million.
  • Global Output Forecast: 102.6 million bpd in 2024, rising to 104.7 million bpd in 2025.
  • Demand Forecast: EIA anticipates 1 million bpd growth in 2024, still less optimistic than OPEC’s estimate.

The EIA’s forecast revisions add to concerns of oversupply. Analysts expect that with increased production but slower demand growth, prices could continue to feel downward pressure, especially if demand from China remains weak.

Technical Analysis: WTI Crude Oil Points to Further Declines

From a technical perspective, WTI Crude Oil is trading below its 50-day Exponential Moving Average (EMA) at $68.90, a signal of continued bearish sentiment. The Relative Strength Index (RSI) sits at 43.39, indicating moderate selling pressure. The price remains within a downward channel, with key levels to watch in the coming sessions.

  • Pivot Point: $68.28
  • Immediate Resistance: $68.28, with stronger resistance at $69.11 and $69.72
  • Immediate Support: $67.54, with additional support at $66.92 and $66.00

USOIL Price Chart - Source: Tradingview
USOIL Price Chart – Source: Tradingview

A break below the immediate support level at $67.54 could open the door to further declines. Conversely, any upward movement above the 50-day EMA at $68.90 might suggest a potential reversal, but traders remain cautious in the current landscape.

Key Insights:

  • WTI Crude Oil is trending below the 50-day EMA, reinforcing a bearish outlook.
  • Immediate support sits at $67.54; a break below this level could deepen the downtrend.
  • Moderate bearish momentum on the RSI suggests continued downside risk, though oversold conditions could prompt short-term corrections.

As the market watches upcoming U.S. inflation data and International Energy Agency reports, investors are seeking further clarity on the supply-demand balance. With the U.S. dollar strengthening and output projected to rise, oil prices may face additional headwinds in the weeks ahead.

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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