Crude oil price is holding steady above the crucial level of $80 even after OPEC+ adjusted its demand outlook for the current year.
Oil demand outlook
In the monthly report released on Wednesday, OPEC + forecasted global oil demand to increase by 5.82 million bpd. The figure is a decline from its prior prediction of 5.96 million bpd.
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The downward revision is founded on the data released over the past three quarters. However, the coalition was quick to add that this outlook may be subject to improvement if natural gas prices continue to surge. As for the coming year, OPEC+ has maintained its demand outlook at 4.2 million bpd.
Even with the ongoing concerns over global oil demand, various analysts are of the opinion that crude oil price will continue to record significant gains in the coming months. For instance, Goldman Sachs expects the commodity to hit $90 per barrel by the end of the year.
On Wednesday, Russia’s president topped that figure by asserting that oil could trade at $100 per barrel in the foreseeable future. Speaking ahead of the Russian Energy Week, Vladimir Putin further asserted that the alliance will likely continue with its current output agreement until the end of 2022. With reference to the ongoing energy crisis in Europe, Putin indicated that his country was willing to supply additional natural gas to the continue upon request.
Crude oil price is further reacting to the weekly US oil stockpile data. This week’s figures have been delayed by a day due to the Columbus Day holiday.
Late on Wednesday, the American Petroleum Institute (API) released higher-than-expected numbers. According to the institute, the amount of oil in storage rose by 5.213 million barrels in the week ending on 8th October. Analysts had expected a lesser build of 140,000 barrels compared to the prior week’s 951,000. However, gasoline inventory and distillate stocks dropped by 4.6 million and 2.7 million barrels respectively.
Analysts and investors will be looking to confirm the trend in the form of the inventory data scheduled for release by EIA on Thursday afternoon. In the past two releases, the agency has recorded an unexpected build. Indeed, the US stockpiles’ current trend reflects OPEC+ demand outlook. The inventory data, coupled with the key stakeholders’ forecast, may curb crude oil price gains in the short term.
Oil price technical outlook
WTI futures are trading above the crucial support zone of 80 despite the higher-than-expected stockpile numbers from API. After hitting a 7-year high on Monday, crude oil price pulled back to Wednesday’s low of 79.40.
At the time of writing, the benchmark for US oil was up by 0.64% at 81.04. On a two-hour chart, it is trading slightly above the 25 and 50-day exponential moving averages.
I expect crude oil price to trade within a tight range ahead of EIA’s stockpile data. It will likely find support along the 25-day EMA at 80.61 while experiencing resistance at Tuesday’s high of 81.60.
Even with a higher-than-expected build, WTI futures will probably hold steady above the crucial support zone of 80. The bears may attempt to break the support by retesting the week’s low of 79.41 before bouncing back above 80.00. On the flip side, a move the upper border of the aforementioned horizontal channel will probably place the resistance level at 82.49.
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