empty
13.08.2024 12:40 PM
Oil markets stabilize

When everyone is selling, it's a great opportunity to buy. Over the past five weeks, hedge funds and asset managers have liquidated six major oil and oil product futures contracts totaling 372 million barrels. Brent was being liquidated at the fastest pace since 2011 due to fears of a U.S. recession and financial market turmoil. But as the storm subsided and fears dissipated, investors turned their attention back to geopolitics.

Federal Reserve officials do not believe that the U.S. is facing a downturn and are debating whether it's even necessary to lower the federal funds rate. The Bank of Japan does not intend to tighten monetary policy during periods of increased financial market turbulence, and the sharp decline in jobless claims is a sign that the U.S. labor market is in better shape than expected. As a result, fears of a sharp drop in global demand amid a slowdown in the global economy have eased, and Brent has started moving north.

Investors were not deterred by OPEC+'s decision to lower global demand forecasts by 140,000 barrels per day (bpd) in 2024 due to a slowdown in China's demand for crude oil. The alliance has long been considered far more optimistic than the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA), and the cut was rather insignificant.

Oil Demand Forecasts

This image is no longer relevant

The specifics reveal the true impact. Despite lowering its forecast for China by 80,000 bpd, the projection suggests that China's appetite for oil should increase in the near future after an underwhelming first few months of the year. In July, oil imports dropped from 11.3 million bpd to 9.97 million. Overall, from January to July, the figure was weaker than expected.

In addition to easing concerns about a U.S. recession and global oil demand, the rise in geopolitical tensions in the Middle East became a strong argument in favor of buying Brent. Israel's invasion of Gaza continues, and Iran has vowed to retaliate for the killing of Hamas and Hezbollah leaders. The armed conflict threatens an embargo on Iranian oil exports of about 1.5 million bpd. Moreover, as retaliation, Jerusalem might target Tehran's oil infrastructure. In a worst-case scenario, Iraq could also be affected.

This image is no longer relevant

Thus, the reduction of risks related to a significant slowdown in global demand and fears of worsening supply issues from the Middle East have become catalysts for the rally in North Sea crude. The only factor that has slowed it down is the anticipation of key U.S. inflation statistics for July. These data will influence the Federal Reserve's monetary policy and provide clues about the state of the U.S. economy.

Technically, on the daily Brent chart, the buy signal triggered by the breakout of the important $78.1 per barrel level, in accordance with the Wolfe Wave pattern, has been precisely followed. It makes sense to hold long positions and increase them on pullbacks or during a test of the pivot level at $82.5.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD. Trump Sends the Dollar into Knockdown Again

The EUR/USD pair is experiencing a correction following Donald Trump's latest statements, as he has once again reignited the tariff war. Interestingly, the greenback initially reacted positively to the president's

Irina Manzenko 23:44 2025-03-27 UTC+2

Gold Knows the Path to Victory

Gold was not a market favorite following Donald Trump's victory in the November elections. In fact, it pulled back once the red wave became clear and the Republican's return

Marek Petkovich 10:55 2025-03-27 UTC+2

XAU/USD – Analysis and Forecast

Gold continues to hold its intraday gains, trading near the weekly high around the $3036 level. This is due to several factors, including uncertainty surrounding U.S. trade policy

Irina Yanina 10:44 2025-03-27 UTC+2

Trump imposes new auto tariffs

The euro, the pound sterling, and other risk-sensitive assets tumbled yesterday following news that President Donald Trump had signed an executive order to impose a 25 percent tariff on imported

Jakub Novak 10:33 2025-03-27 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is gaining some positive traction, breaking a six-day losing streak. The bullish momentum is lifting spot prices toward the 1.0785 level, marking a new daily high

Irina Yanina 09:58 2025-03-27 UTC+2

Who Had Any Doubts? Trump Remains Committed to His Economic Course (GBP/USD May Fall, #SPX May Rise)

Despite the ongoing political maneuvering, U.S. President Donald Trump remains committed to his economic strategy. This approach aims to dismantle the long-standing global economic model in which the U.S. primarily

Pati Gani 09:21 2025-03-27 UTC+2

Market picks wrong favorite

The higher the climb, the harder the fall. The S&P 500 tumbled in response to Donald Trump's announcement of 25% tariffs on automobiles. There will be no exceptions, although countries

Marek Petkovich 08:13 2025-03-27 UTC+2

What to Pay Attention to on March 27? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Thursday, and even fewer are deemed important. The only report that deserves attention is the third estimate of U.S

Paolo Greco 05:42 2025-03-27 UTC+2

GBP/USD Pair Overview – March 27: The British Pound Stalls

On Wednesday, the GBP/USD currency pair openly traded in a flat range. Volatility remains low, with no trending movements even within the day. In other words, the market is simply

Paolo Greco 03:06 2025-03-27 UTC+2

EUR/USD Pair Overview – March 27: Donald Trump Steps Back

On Wednesday, the EUR/USD currency pair continued trading with minimal volatility and a slight downward bias. Trading volumes were absent, which is unsurprising—there has been very little news this week

Paolo Greco 03:06 2025-03-27 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.