Oil Price Update: IEA Lowers Demand Growth Estimate, Oil Recovery Slows

IEA Reduces Forecast for Oil Demand
According to the IEA’s most recent outlook, slow economic activity, high interest rates, and advancements in energy efficiency will all contribute to weaker-than-expected demand growth. Among the main causes of the downward revision are:

Oil demand is being dampened by slower industrial activity in China and Europe.
tighter financial conditions that affect energy-intensive industries and international trade.
increased use of renewable energy sources and improved fuel efficiency, which lessens dependency on oil.
The market’s mood is being affected by the IEA’s updated prognosis, which is preventing oil from continuing its comeback.

There are obstacles to oil recovery.
Crude oil prices are currently having difficulty gaining traction following a brief recovery. A number of issues are preventing WTI and Brent crude from rising steadily:

US Dollar Strength: A strong USD limits price increases for foreign buyers by raising the cost of oil.
Growing US Crude Stockpiles: According to recent EIA statistics, US crude stockpiles have increased, indicating sluggish demand.
Geopolitical Risks vs. Demand Issues: Although geopolitical concerns help oil prices, bullish momentum is offset by poor demand outlooks.
Traders are nonetheless wary of oil’s upward potential because demand growth projections have been lowered.

Technical Prognosis: Important Levels to Monitor
WTI Crude Oil (US Oil) Support: $76.00 to $75.00 → It is imperative to hold above this range to stop additional drops.
Resistance: $80.00 to $82.00 → A bullish surge could be confirmed by a breakout over this.
Support for Brent Crude Oil (UK Oil): $80.00 to $78.50 → A decline below this level might increase selling pressure.
Resistance: $85.00 – $86.50 → A close above this would strengthen bullish sentiment.
Technical indicators imply oil continues in a consolidation phase, with breakouts in either direction likely driven by fundamental factors.

Prospects: Will the Price of Oil Rise Again?
Oil traders will now concentrate on important data points and geopolitical developments to decide their next course of action, as the IEA’s negative revision has dampened demand forecasts.

In tempus aptent taciti sociosqu ad litora torquent per conubia nostra, per inceptos himenaeos.

Jonathan Archer

Future Events to Keep an Eye on: US Economic Data → Growth and inflation numbers may affect projections for oil consumption.
The Production Strategy of OPEC+ → Weak demand worries could be offset by any indications of supply shortages.
Geopolitical Factors: Russia-Ukraine or Middle East tensions may help prices.