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In the second half of 2023, the International Energy Agency forecasts a 2 million bpd supply deficit. The rise in oil prices is a result of positive developments in the US debt ceiling negotiations. Due to a slowdown in China’s economic growth, US crude oil prices are rising despite rising stocks.
As a result of renewed optimism following signs that US debt ceiling negotiations might result in an agreement, WTI increased more than 3% in the late New York session, trading at over $72.90. Additionally, the International Energy Agency (IEA) announced that demand would surpass supply, driving increasing oil prices.
With China responsible for 60% of the rise in demand for oil in 2023, demand is expected to exceed supply. The IEA forecast that in the second half of the year, supply will outpace demand by 2 million barrels per day (bpd), with China accounting for 60% of the rise in oil demand in 2023.
As he leaves for Japan, US President Joe Biden expressed his confidence in raising the debt ceiling. While Biden stated that he intended to keep in frequent communication with the speaker and negotiators, US House Speaker Kevin McCarthy stated that he intended to be actively involved in negotiations.
According to the US Energy Information Administration (EIA), US crude oil prices defy the rise in US stocks. Contrary to analysts’ predictions of a 900K decline, stockpiles increased by 5 million barrels in the most recent week to reach 467.6 million barrels.
Recent economic data from China showed that the economy is slowing down. Reuters cites sources that state that “a bunch of Chinese macro-economic data for April released on Tuesday confirmed the narrative of a patchy and slow recovery in the country and continue to weigh on oil market sentiment.”
After falling below $70.10, WTI has gained some ground, reaching a two-week low of $69.44. WTI buyers entered, nevertheless, pushing the price up towards the 20-day EMA, which, if cleared, might open the door for a test of the 50-day EMA at $74.91. The 100-day EMA at $76.78 would be the next price after clearing. However, the Relative Strength Index (RSI) indicator remains in the bearish range, indicating that sellers are still in control. As a result, it is expected that WTI will fail to break through the $73.00 PB level and fall towards the $69.00 area.
