Crude oil outlook: WTI hits new 2023 high

Crude oil outlook: Investors continue to ignore demand concerns
OPEC+ cuts continue to offset worries over China, demand
WTI technical analysis: Prices at ‘overbought’ levels

WTI oil prices reached its highest levels since last November, breaking above the April high of $83.50 briefly, before coming off its best levels. Traders will be watching to see how oil prices will close the session today. The OPEC+ ongoing supply cuts are continuing to offset concerns over demand. But will WTI manage to climb to $85 and higher?

Crude oil prices came off their best levels in reaction to the latest crude oil inventories report, showing a surprisingly large build of 5.9 million barrels of crude last week. However, the other aspects of the report were strong as refinery utilization rate increased sharply and stocks of oil products dropped.

Crude oil outlook: investors continue to ignore demand concerns

So far, investors have chosen to ignore demand concerns. We have seen weakness in global manufacturing sector, although so far this hasn’t impacted oil prices in a meaningful way. Chinese markets have struggled all year due to weakness in data there. Next week, we will get more updates on the health of the world’s second largest economy with the release of industrial production and retail sales among a few other data pointers on Tuesday. This week, we saw consumer prices come in at an annual rate of -0.3% (deflation). While falling Chinese prices is good news on the inflation front, CPI in deflation territory is indicative of a weak economy. This was highlighted in the trade data showing a 12.4% drop in imports from last year in July. But if we see next week’s data deteriorate, then this could raise recession alarm bells and weigh on prices amid demand concerns.

Crude oil outlook: WTI technical analysis

The fact that WTI has broken the post-OPEC high of $83.50 made in April means that people who had been bearish or sceptical of the group’s efforts working, have been proven wrong. As more bearish speculators now step aside, oil prices should continue trending higher for as long as there are no major demand worries. So, a move up to $85 looks increasingly likely from here. But in the short-term, don’t be surprised to see a dip as prices are clearly overbought, and many risk assets have struggled this week.

Source: TradingView.com

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.