WTI under pressure as China’s economy slows

Following China’s rate cut and the significant drive for greater lending, which indicate a deteriorating economy, WTI crude declined by 0.95 percent. Pessimism is increased by the significant 31% decline in Saudi Arabia’s oil shipments to China in July.

The US rig count is falling, indicating a likely tightening of the supply, which would provide a temporary support for WTI prices. On Monday, the US standard for crude oil, WTI, lost 0.95% of its value as a result of China’s economic woes.

Uncertainty over the US Fed’s rate policy favours the dollar, which is a disadvantage for assets denominated in US dollars. WTI is down 0.95%, trading at $80.58. Despite reductions in supply from Saudi Arabia and Russia, the price of crude oil is impacted by China’s economic worries and a strong US dollar.

Despite the People’s Bank of China (PboC) lowering rates by ten basis points in an effort to boost a slowing economy, WTI continued to lose ground. Government representatives and PboC members urged banks to increase loans at the same time.

Saudi Arabia and Russian crude oil supply reductions eased the WTI decline in the interim. However, according to figures from China’s customs, Saudi Arabia’s oil shipments to that country fell 31% in July compared to June.

According to Baker Hughes data, there were 520 active rigs last week, down 4 from the previous week. According to ING analysts, supply tightness might prevent WTI prices from dropping significantly. Since the beginning of December, the US has lost 107 oil rigs, so it is not unexpected that predictions for the rise of oil output through 2024 are expected to be very moderate.

Technically, a golden cross is ready to develop, which would indicate that oil prices would continue to rise. The year-to-date (YTD) high is expected to be the first obstacle to overcome at $84.85, followed by the daily high from November 11 at $90.08, and then the high from November 7 at $93.73. WTI’s initial level of support, on the other hand, would be $80.00 per barrel, followed by the most recent swing low of $79.00.