Oil prices fell on Friday during the late morning London session as the market bought into Thursday’s downward forecast by the International Energy Agency (IEA). Contracts on benchmark WTI were traded at $76.81 per barrel at 11.30 am GMT, down 0.87%. Similarly, Brent crude was at $82.04, having gone down -0.85%. The IEA’s projections, which revised the daily demand downwards from 1.24 barrels per day to 1.22 barrels per day, contrasts with OPEC’s optimistic forecast, released on Wednesday, which said that demand would rise by 2.25 million bpd.
Oil has been under pressure over the last three days, mostly driven by a weak demand outlook. US crude inventories data released on Wednesday showed a buildup of 12 million barrels in US stockpiles, cementing views of low demand.
The market is currently trading on the demand-supply forces, choosing to pay little attention to the geopolitical developments in the Middle East. The weak demand outlook for oil is likely to define the market sentiment, at least until later on Friday when the US Producer Price Index (PMI) reading comes out. The reading will define the strength of the US dollar heading into the weekend, and possibly into early next week.
Furthermore, China’s economy opens for business next week after a week-long holiday, and developments in the Chinese market could impact oil prices. Meanwhile, developments over the last 24 hours, coupled with a stable US dollar will likely keep oil prices under pressure throughout the weekend.
Technical analysis
WTI crude prices are under pressure, with the RSI signaling a downward momentum. The commodity will likely pivot at 78.40, with the downward momentum pulling prices to the first support at 76.70. If the bears retain control beyond that point, the price could go lower to test 76.15. The price will build up upward momentum if it breaks the first resistance at 78.75. Further control by the bulls could push the price up to target 79.30.
Oil price on a 30-minute chart