Key points:
WTI oil prices (Symbol: USOUSD) continued the upward trend, reaching approximately $69.4 per barrel.
This marks the third consecutive session of gains, driven by concerns over supply disruptions in the US Gulf of Mexico due to Hurricane Francine.
Picture: Oil price rises for 3rd straight day on supply concerns, as observed on the VT Markets app.
The recent market movement in the U.S. oil sector reflects impact from weather-related disruptions. On Thursday, over 730,000 barrels per day of crude oil production, equating to 42% of the region’s total output, were halted due to a hurricane.
Despite this, the U.S. Oil (USOUSD) price chart shows resilience. The price experienced a dip to $65.52 on 11 September, but it has since rebounded, climbing towards $69.41. The MACD (12,26,9) indicator currently suggests positive momentum, with the histogram showing bullish divergence, while the EMA (24,24,72) lines are providing dynamic support as prices approach the $70 range.
This recovery signals that while supply concerns from hurricane disruptions remain, traders anticipate a stabilisation in oil prices.
Despite this upward movement, a downside bias remains as global demand faces challenges. The International Energy Agency (IEA) recently pointed out that oil demand growth is slowing, particularly due to China’s weakening economy, which could lead to a supply surplus in 2024 even if OPEC+ continues its production cuts.
The impact of Hurricane Francine on the U.S. production offers temporary support for prices, but the IEA’s warning about a potential supply surplus next year could weigh on future price growth.
Read more on how to trade oil.
Moreover, China’s slowing economy, coupled with a 3.1% decline in crude oil imports from January to August 2024, is signalling further demand weakness in one of the world’s largest oil consumers.
Traders will also focus on US demand, which has shown signs of softening as fuel stocks rose last week, adding pressure to the outlook for oil prices.
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