Key Insights
- Brent crude and WTI see modest upticks despite an overall bearish sentiment in oil markets.
- Concerns linger over Middle East supply disruptions and weak demand in China.
- Short-term outlook remains cautious with Brent crude facing a weekly loss of approximately 4% and WTI down 3%.
Oil prices remained relatively stable but are set to close a second consecutive week with losses. The uncertainty centers on supply disruptions in the Middle East and concerns about the demand outlook, especially in China, the world’s largest crude importer.
Brent Crude and WTI Movements
Brent crude futures experienced a slight uptick to $87.14 per barrel, up 29 cents or 0.3%. Simultaneously, U.S. West Texas Intermediate crude futures rose by 36 cents, a 0.4% increase, settling at $82.82 per barrel.
Despite a notable $2 per barrel gain on Thursday, Brent crude is heading for a weekly loss of around 4%, while West Texas Intermediate (WTI) is expected to close the week with a 3% decline. These price movements are tied to the overall risk environment.
Market participants are cautiously optimistic that the U.S. Federal Reserve is nearing the end of its interest rate hikes, but concerns persist regarding oil demand, particularly due to developments in China.
China’s PMI and Economic Uncertainty
China’s official purchasing managers’ index (PMI) fell from 50.2 to 49.5 in October, indicating unexpected contraction in manufacturing activity. This drop raises questions about demand recovery in China, the world’s second-largest economy.
A private sector survey revealed slightly faster growth in China’s services sector but flagged concerns such as the slowest sales growth in ten months and stagnant employment, reflecting declining business confidence.
Short-term Outlook
In the near future, the oil market is expected to maintain a cautious stance, leaning more toward bearish sentiment. Supply concerns in the Middle East are easing, and doubts remain regarding China’s demand dynamics.
Brent crude may post weekly losses of around 4%, while WTI faces a 3% decline compared to the previous week. Market participants should monitor potential fluctuations in the coming days.
Technical Analysis of Light Crude Oil Futures
Light crude oil futures saw a marginal increase, trading at $82.69, just above the previous close at $82.46. The price is hovering near minor resistance turned support at $82.68, indicating a potential shift in sentiment.
While the price is situated between the 200-day and 50-day moving averages, suggesting a neutral stance, it leans towards a bullish bias, given its proximity to the shorter-term 50-day MA at $86.32. The close proximity to minor resistance suggests cautious optimism among traders.