USOIL crude oil prices stabilised around $68.5 per barrel on Thursday, pressured by a report from the International Energy Agency. The IEA warned that the oil market could face a surplus exceeding 1 million barrels per day by 2025, especially if OPEC+ continues with its plans to increase production. This potential oversupply is due to weakening Chinese oil demand.
In its latest monthly report, the IEA revised up its global oil demand growth forecast for 2024 but slightly lowered its projection for 2025, reflecting the impact of an economic slowdown on consumption. For 2025, the growth forecast was cut slightly from 998,000 bpd to 990,000 bpd. This marks a significant slowdown compared to the nearly 2 million bph growth seen last year, as the post-pandemic demand surge wanes, and the rapid adoption of clean energy transport technologies continues to dampen oil consumption growth.
Meanwhile, Chinese consumption has contracted k for six consecutive months and is expected to grow only 10% from 2023 levels this year. Additionally, the US dollar has surged to its highest point in two years, making oil more expensive for global buyers. In addition, increased US, Brazilian and Canadian production is contributing to the oversupply.
Despite geopolitical concerns, such as tensions in the Middle East, oil prices have fallen 11% since early October. Traders are now focussing on next month’s OPEC+ meeting, where the decision on production hikes could influence the future trajectory of the market.
From a technical perspective, USOIL is in a consolidation phase. The key support is near the $65.00 range with resistance around the $72.50 range. The price formed a Pinocchio bar pattern, after testing the bottom of the range which suggests a potential rebound, with a possibility of testing $70.00 or further to $72.50. The RSI remains l below the mid-level, indicating that the rebound has not yet been validated and momentum remains weak.
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Ady Phangestu
Market Analyst
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