Oil continuous decline as US session gets underway
Oil prices slides lower and trades near a fresh daily low at $79.70 with the US session just around the corner and ahead of the main event at the end of the week. That main event is the annual Jackson Hole Fed Symposium where on Friday Fed chairman Jerome Powell will take the stage and communicate any possible changes toward its monetary policy. Clues or hints for earlier than foreseen rate cuts would boost economic growth and demand for oil, which would result in a sharp price rise on Friday.
A decline could be at hand if Fed Chairman Powell sticks to concerns on inflation flaring up again and the need to keep rates elevated for longer.. A longer period of higher rates could eat into economic growth and might dampen demand for oil. As always on Tuesday, the American Petroleum Institute will deliver the weekly Crude Oil Stock report at 20:30 GMT.
At the time of writing, Crude Oil (WTI) price trades at $79.70 per barrel and Brent Crude at $83.78.
Oil news and market movers
- The US Dollar is in very choppy trading this Tuesday with the US Dollar Index earlier breaking below vital support, and now reversing in the green ahead of the US session.
- The current negative oil spread is stoking up Asian interest for buying US barrels.
- China extends tax waiver for overseas crude futures investors.
- On Tuesday evening at 20:30 GMT, the American Petroleum Institute will deliver the weekly Crude Oil Stockpile numbers. No expectations have surfaced, but last week’s number was a big draw down of -6.195M barrels.
- Overnight numbers showed that China’s July LNG imports rose by 24.3%.
- Iraqi supply might increase and flood markets, limiting any uptick in oil prices. It is not until early November before the OPEC countries convene again to discuss current oil prices and production levels.
- Reports show that the Panama Strait is closed due to low water levels, which has triggered a cue in ships and containers passing the important trade passage.
- India’s Crude Oil and LNG imports declined on the year for July.
- Global concerns on the failing China reopening narrative might see less demand throughout the year as China has been unwilling to jumpstart its growth and recovery post-covid.
- The tropical depression on its way to Texas might strengthen before reaching landfall.
- All eyes are focused on Friday, when the annual Jackson Hole Symposium will be the focal point for the week. In the event, the US Federal Reserve tends to signal a change in its monetary policy going forward.
Oil Technical Analysis: Nothing to see here
Oil price is right where it needs to be at the moment with both demand and supply in a good place before the market moving event of Jackson Hole on Friday. On one hand, less demand from China and more Iraqi barrels hitting the market are dampening any possible upside potential, while a tropical depression hitting the Texas area might see a short-term production shortage in the US, limiting any sharp declines in oil price action. The Jackson Hole Symposium and Jerome Powell’s speech could move the needle in that equation and see the Relative Strength Index (RSI) break through the 50 level to either being overbought or oversold.
On the upside, $81.68, the high of Monday, is the one to beat in order to trigger a small uptrend. Should WTI continue its performance of higher lows and higher highs, pressure could build toward $82. In order to print a fresh monthly high, $84.32, the peak of mid-August is the one to beat when demand takes over and supply cannot follow suit.
On the downside, a temporary bottom is being formed around $78.50. That is where throughout August buyers stepped in and jacked the oil price back up toward the $80s. In case that support breaks, expect to see a sharp decline toward $76 where the 200-day SImple Moving Average (SMA) comes into play. Plenty of buyers will happily lock in that price with some bigger volume being bought.