CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Crude Oil Week Ahead: OPEC Report, IEA Report, and Supply Concerns

Article By: ,  Market Analyst
Sunday 1:59 PM

Key Events

  • OPEC Monthly Report (Monday)
  • IEA Monthly Report (Tuesday)
  • Chinese Q3 GDP (Friday)
  • US Hurricane Activity
  • Ongoing Geopolitical Conflicts
  • Technical Analysis: USOIL

OPEC Monthly Report

Historically, global oil demand averaged 1.4 million barrels per day (mb/d) prior to COVID-19. In its September report, OPEC downgraded its demand growth forecast for 2024 to 2.0 mb/d and 1.7 mb/d for 2025, with supply growth projections of 1.2 mb/d in 2024 and 1.1 mb/d in 2025. However, recent developments, including Chinese economic stimulus measures and escalating geopolitical tensions, could impact these forecasts. This week’s OPEC report will be closely monitored for any updates reflecting these evolving conditions.

IEA Monthly Report

Similarly, the International Energy Agency (IEA) has also adjusted its oil demand outlook downward, mainly due to the economic slowdown in China. The latest Chinese stimulus initiatives are still in their early stages, and their effects have yet to fully materialize.

Monetary Policies: US – China

Recent U.S. economic data has pointed to a less aggressive cycle of monetary easing, which implies more modest support for oil demand and economic growth. In contrast, China is pursuing a more aggressive approach to stimulus as it aims to hit a 5% GDP growth target. If these measures succeed, they could prompt an upward revision in global oil demand, particularly in Q4 2024 and into 2025.

Ongoing Geopolitical Conflicts

Geopolitical tensions are escalating across various regions, posing risks to global economic growth and, more directly, to oil supply. These conflicts have the potential to disrupt key oil-producing regions and facilities, adding upward pressure to oil prices. This uncertainty is driving market participants to hedge against potential supply shocks, often through call options, as they anticipate further price gains.

Technical Analysis

Crude Oil Weekly Outlook: USOIL – 3Day Time Frame – Log Scale

Source: Tradingview

Oil prices closed the volatile week at a price of 75.26 below the borders of the primary consolidation. With oil volatility pressured below that pattern, a bias towards the bear side can still be considered. However, given supply disruption risks between Hurricanes and geopolitical tensions, further upside risk for oil prices remains possible on the charts.

Bullish Scenario:

A breakout in the 3-day relative strength index (RSI) above the resistance line formed by the lower highs between April and July 2024 could signal the start of a bullish move. If prices close above the 76-mark, a retest of 80, 83.50, and 86 levels could follow.

Bearish Scenario:

In tandem with the primary bearish track of oil prices beyond supply disruption risks, a close below 70 can drag oil prices back towards the key 65 level before extending a bearish scenario back towards 60-58.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024