Crude Oil Prices Retreat Despite Reports about Production Cuts
WTI Crude oil prices trading 0.55% lower at $54.19 per barrel after US API Weekly Crude Oil Stock fell from previous 10.5M to 4.45M on October 18. API also reported smaller than forecasts decline in gasoline stocks but a bigger than expected decline in distillate stocks. Reports indicating that OPEC+ producers might consider deeper production cuts in their next meeting in December The International Monetary Fund lowered its 2019 growth forecasts for the Asian region to 5% from 5.4% projection made in April. IMF has also revised the 2020 growth forecast lower to 5.1% from 5.4%. The global economy’s growth rate expected to 3% down from 3.2% in a July forecast.
Crude oil rebounds from the August 7th lows at $50.74 up to $63.30 amid the attacks. However, as the oil supply from Saudi Arabia has been fully restored, the crude oil price retreated back to the levels seen before the attacks.
Crude oil price failed to hold the gains after recent spikes on increasing geo tensions in the Middle East. Oil investors focus on crude fundamentals and ignore the new point of geopolitical tensions in the East. Many analysts expect crude oil to remain under pressure in the short term due to weak global demand on the back of recession fears, US-China trade tensions and a stronger USD.
On the technical side, crude oil looks trapped between $52 and $55 as the momentum is negative for crude oil price, and trades below all the major daily moving averages. On the downside, immediate support stands at daily low of $53.97, then at $52.91 low from October 21st followed by the October 19th lows at $51. If the price closes convincingly below October low, it will pave the way for a move down to YTD lows at $45.
On the flip side, crude oil immediate resistance level stands at the daily high at 54.31, while more offers could emerge at 55.30 the 50-day moving average. Next barrier is the 100-day moving average at $55.61. Short positions in WTI crude probably look safe as long as the price hovers below $55.00. Overall, the bears are in control despite the geopilitial tensions in the Middle East, and any move higher will probably be considered as a selling opportunity.