WTI Crude Oil Stabilizes Over $80.50 Amid U.S. Inventory Drop and China’s Slow Growth

Wednesday saw oil prices holding steady, with Brent crude barely moving from a one-month low of $83.30 reached on Tuesday—the lowest since

Written by: Arslan Butt • Wednesday, July 17, 2024 • 2 min read

Last updated: Wednesday, July 17, 2024

Wednesday saw oil prices holding steady, with Brent crude barely moving from a one-month low of $83.30 reached on Tuesday—the lowest since June 17. Whereas, the USOIL holds near $80.50.

This market behaviour stems from the juxtaposition of reduced demand expectations in China against a significant decline in U.S. oil reserves.

As Priyanka Sachdeva from Phillip Nova noted, “While the Chinese market shows signs of cooling, robust U.S. retail data suggests the economy remains resilient despite higher borrowing costs.

“Impact of Economic Indicators on Oil Prices

China, the largest oil importer globally, recorded its slowest economic growth since early 2023, growing at 4.7% in the second quarter as per official statistics.

This sluggish growth rate is exerting downward pressure on global oil demand. Simultaneously, the U.S. dollar’s strength—evident from its sustained rise over three sessions—made oil more costly for holders of other currencies, thus impacting oil prices negatively.

Daniel Hynes of ANZ Bank pointed out that the robust dollar is a significant factor in the oil price equations.

U.S. Oil Supply and Geopolitical Tensions

In the U.S., a major oil producer and consumer, there was a notable inventory reduction of 4.4 million barrels for the week ending July 12, significantly higher than the forecasted 33,000 barrels, which supports oil price stability.

On another front, geopolitical risks are also playing a role in curbing price falls. An oil tanker under a Liberia flag was recently attacked in the Red Sea, escalating tensions and contributing to market uncertainties.

This situation, coupled with unchanged retail sales in June, underscores a complex but resilient economic landscape influencing oil prices.

USOIL Technical Outlook

Currently, USOIL trades at $80.63, a slight decrease of 0.14%. The trading below the pivot point of $81.12 suggests a bearish outlook. If prices stay under this threshold, further declines could target support levels at $80.12, $79.48, and $78.86.

Conversely, surpassing $81.12 may signal a bullish turn, with potential resistance at $81.79 and $82.53. The 50-day and 200-day EMAs at $81.69 and $81.73, respectively, reinforce the importance of these technical levels.