Oil Prices Ease Amid China Demand Concerns and Middle East Ceasefire Talks

Oil prices edged lower in early Asian trading on Monday as concerns over weaker demand in China, the world's top oil importer, weighed

Written by: Arslan Butt • Monday, August 19, 2024 • 2 min read

• Last updated: Monday, August 19, 2024

Oil prices edged lower in early Asian trading on Monday as concerns over weaker demand in China, the world’s top oil importer, weighed heavily on market sentiment.

Investors are also closely watching the progress of ceasefire talks in the Middle East, which could alleviate some of the supply risks that have been supporting the market.

Demand Concerns in China:

China, the world’s largest oil importer, is showing signs of weakening demand.
New data revealed a slowdown in China’s economy, with industrial output lagging and new home prices falling at the fastest rate in nine years.

Market Impact:

Last Friday, both oil benchmarks fell nearly 2% as expectations of demand growth from China diminished.
However, the week ended largely unchanged, bolstered by positive U.S. data indicating moderating inflation and strong retail spending.

Geopolitical Tensions Underpinning Prices:

Despite the bearish sentiment driven by China’s demand concerns, ongoing geopolitical tensions in the Middle East and the escalation of the Russia-Ukraine conflict continue to provide underlying support for oil prices.

Track the rebound in oil prices amidst geopolitical tensions and volatile market conditions. #OilPrices https://t.co/dTn3S9flh0

— Capitalist Money (@CapMoneyNow) August 18, 2024

Middle East Ceasefire Talks:

U.S. Secretary of State Antony Blinken visited Tel Aviv on Sunday to advance ceasefire negotiations in Gaza, though progress remains uncertain.
The continued violence and lack of resolution have kept the market wary of potential supply disruptions.

Crude Oil Price Chart – Source: TraingView

WTI Crude Oil Price Forecast

Current Price: WTI Crude Oil is trading at $75.23, reflecting a slight decline as bearish momentum persists.
Technical Indicators:
The price remains below the pivot point at $75.92, reinforcing a bearish outlook.
The 50-day Exponential Moving Average (EMA) is trending downward at $76.99, adding to the pressure.
The Relative Strength Index (RSI) is at 32, approaching oversold territory, but further declines are still possible.
Support and Resistance Levels:
Immediate Support: $74.59, with additional levels at $73.31 and $72.20.
Resistance: First resistance at $77.09, followed by $78.55 and $80.

Conclusion: The outlook for WTI Crude Oil remains bearish as long as prices stay below $75.92. A break above this level could signal a shift in momentum, but for now, sellers continue to dominate the market.