Over the past few weeks, WTI crude has been trading between $67 and $70 per barrel, with prices stabilizing near $69 by mid-September. The attached data shows a recent uptick from $67.75 on Sept 12 to $69.88 on Sept 17, indicating potential price support at the lower $67-$68 range.
- Geopolitical Tensions & Production Delays: Supply-side pressures have emerged from production delays in major exporting countries. Geopolitical unrest, as highlighted in the news, is complicating logistics, leading to slower-than-expected recovery of supply flows. While these factors are driving short-term recovery, they're not enough to push oil past key resistance levels ($72 as indicated in the articles). This has kept oil prices relatively capped, as noted in the $69-$72 range.
- Demand Worries: Global demand is still under pressure. China, one of the largest oil consumers, continues to experience weaker-than-expected economic activity, casting a shadow on future demand growth. Coupled with a cautious Fed, which remains hawkish, oil demand remains under strain, limiting upward price momentum. Despite some minor recovery signs, demand-side weakness is likely to weigh heavily through Q4 2024.
- V-Shape Recovery Potential: Some analysts are speculating on a potential V-bottom recovery, where prices could rebound sharply from their current lows. However, the data doesn't strongly support this narrative yet. The recent bump in prices seems more technical than fundamental, driven by supply disruptions rather than a structural shift in demand or production.
- Technical Outlook: Based on historical price action and resistance levels, WTI's path forward remains sensitive to $72. If prices breach this threshold, we may see an acceleration toward the $75-$78 range. On the flip side, any failure to hold support around $67 could push oil lower, potentially testing the $65 level again, especially if demand indicators out of China worsen or the Fed tightens further.
WTI remains in a delicate balancing act between supply constraints and demand concerns. While supply issues may provide short-term relief, the broader outlook is cloudy due to weak global demand, particularly from China. Traders should watch the $67-$72 range closely for any significant breaks. A sustained move below $67 would signal more downside, while a clear breach above $72 could mark the start of a more sustained recovery.
