Crude oil prices fall due to rising rates and China’s demand. This week, oil prices decreased by almost 4%due to rates and demand worries from China. Despite the possibility of lower oil prices in the next few days. The reopening of the Chinese economy has improved the medium-term prognosis for the commodity.
Crude oil weary of the WTI front-month futures contract
The price of oil fell significantly at the end of the week, falling almost 4 percent to trade around $76.5 / barrel. strengthened by a stronger currency and rising US Treasury yields.
Bond rates have sharply increased this month due to aggressive repricing of the Fed’s tightening trajectory. Igniting concerns that sharply increased this month as a result of hawkish repricing of the Fed’s hardline path. Sparking concerns that the atmosphere of tighter monetary policy will stifle growth and damage commodities.
Crude oil looking at China’s Covid-19 situation
Concerns that China’s fuel demand is not yet taking off due to its low movement affected WTI and other international benchmarks as well. Covid-19 is still ravaging the nation despite the swift withdrawal of the majority of pandemic containment efforts.
These fears are real, there is no doubt about it, but the communist country’s present situation is only transitory. When the population develops herd immunity, the economy ought to rebound and increase energy consumption. This might happen quickly.
While in the upcoming days and weeks, market trembling and a risk-off attitude may occasionally have an impact on cyclic products.
Later in the year, the openness of China and the robust U.S. economy should provide favorable conditions for crude. Production from OPEC+ should be controlled and regulated in order to support a positive outlook.
Even when the trade freely turns into a supply deficit during the second period of 2023. The cartel is anticipated to adhere to present output limitations.
On the oil market, reality finally seems to be setting in.
Those who were long the market at first refused to budge against the blockbuster crude builds disclosed by the U.S. government in search of what they assumed would be impending Chinese demand.
As supplies are plentiful and fears about global growth resurface, crude prices are sliding. According to Ed Moya, an analyst at the online trading platform OANDA. “Oil is experiencing consistent selling pressure, and the true test will be if prices can drop under $72 / barrel.
WTI and Brent crude posted declines
West Texas Intermediate, or WTI, crude for March trading on the New York exchange finished lower by $2.15, or 2.7%, at $76.27. The WTI session low is at $75.08 represented a nearly two-week bottom.
The main U.S. crude price fell 4.4% for the week. In the last four weeks, WTI has lost approximately 7%, falling in three of those four weeks.
Brent crude for March delivery traded on the London market fell $2.14, or 2.5%, to $83. The intraday bottom of Brent is $81.81, which marked a low since February 6.
The global crude benchmark Brent fell 4 percent for the week. Brent has fallen in three of the last four weeks, losing more than 5 percent during that time, similar to WTI.
Technical perspective
According to technical analysis, our daily graph shows that oil seems to be forming a head and shoulders configuration. If prices complete the second shoulder and close underneath the neckline at roughly $73.50, this bearish formation may be completed.
This breakdown may initiate the subsequent decline, opening the door for a retest of the $70 region and a move down to $66.20.
On the other hand, the first resistance can also be located near the psychological level of around $79. If buyers come back and start a bullish reversal.
If that ceiling is broken on the upside, the upward trend may pick up speed. And, market bulls may turn their attention to the Jan top
The number of barrels and days of supply of crude oil
