Crude Oil Forecast: Oil Dives Deeper into it's Consolidation

• US Election Updates
• Chinese GDP and PBOC’s rate cut
• US Advance GDP
• Crude Oil Inventories 

US Elections Update

The potential entry of Kamala Harris into the presidential race is energizing Democrats, securing support from Democratic governors and the majority of Democrats in Congress. The latest polls, including the Reuters/IPSOS opinion poll, show a marginal lead for Harris over Trump.

Impact the oil market:

• A clear majority for the Democrats could push for clean energy investments and net-zero plans, potentially reducing overall oil demand and adding bearish pressure on oil prices.
• A clear majority for the Republicans could focus on oil and fossil fuel investments, including fracking plans, potentially boosting oil prices.

China’s Surprising Rate Cut

In an effort to stimulate its slowing economy, the PBOC cut key short-term policy rates. The latest Chinese GDP figures have exerted bearish pressure on oil prices. The impact of these economic stimulus policies on growth rates and oil prices is being closely monitored.

US GDP

Following the impact of the Chinese GDP on oil charts, the US advance GDP is next in sight. These figures have the potential to influence oil demand potential beyond the summer season, along with the pace of the rate cut date.

Crude Oil Inventories

Crude oil inventories are expected to increase from the previous -4.9M barrel change to -2.6M barrels. However, the latest report from the American Petroleum Institute revealed a fourth consecutive drop in inventories to -3.9M barrels, averaging a total loss of 19.4 million barrels.

Technical Outlook

Crude Oil Forecast: USOIL – Daily Time Frame – Log Scale

Source: Tradingview

Oil is retesting its first support zone, marking the latest low at 76.38.

Bearish Scenario

The lower border of the consolidation remains open to support the final leg inside the triangle near the 74.80 – 74 zone.

Long-term declines beyond the consolidation could head back towards the 69 zone.

Bullish Scenario

A trend reversal within the consolidation could encounter potential resistance levels near 80 and 81.40.

A climb above the consolidation and the 85 zone could push towards the 2024 high near 87.30 and potentially align with the 90 zone, with resistance at 92.

--- Written by Razan Hilal, CMT