. China's Influence on Crude Oil: Supply and Demand

China’s Influence on Crude Oil: Supply and Demand

23 Jan 2024

Crude oil stabilizes amid mixed signals in supply and a cautious outlook on China.

FUNDAMENTAL OVERVIEW:

On Tuesday, oil prices remained largely unchanged as traders assessed various conflicting concerns regarding supply and demand, ranging from heightened tensions in the Middle East to production disruptions in the United States due to cold weather.

Both contracts closed approximately 2% higher on Monday, propelled by concerns over supply after a Ukrainian drone strike on Novatek’s Ust-Luga fuel export terminal. Analysts anticipate Novatek to resume substantial operations at the terminal within weeks.

Restraining the upward momentum in prices are apprehensions about China’s sluggish economic revival, fueling concerns about global oil demand. This is particularly significant as China stands as the world’s largest importer of crude oil.

Despite Chinese policymakers implementing a series of measures to support the economy, domestic consumption remains subdued. This has left oil traders anxious about the prospects for demand.

A Reuters survey indicating an anticipated decline of around 3 million barrels in U.S. crude oil inventories for the week ending January 19 provided a mitigating factor against price declines. Forecasts suggested a decrease in distillate stockpiles, while gasoline inventories were expected to increase during the same period.

BRENT CRUDE OIL TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

Brent Crude Oil is currently trading within a down channel.

Brent Crude Oil is positioned above all the Moving Averages (SMA).

The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.

Immediate Resistance level: 80.09

Immediate support level: 78.33

HOW TO TRADE BRENT CRUDE OIL

Following a significant decline, Brent Crude Oil has found support and is currently attempting an upward movement. The price is approaching a crucial resistance level, and a breakthrough could lead to further upside potential.

TRADE SUGGESTION- Stop Buy– 80.68, TAKE PROFIT AT- 84.36, SL AT- 78.40.