Crude Oil News Today: Steady Despite Mixed Chinese Data

James Hyerczyk
Updated: Jun 17, 2024, 19:21 GMT+00:00

Key Points:

  • Oil prices hold steady as China's slow recovery offsets summer demand boost, mixed data impacts outlook.
  • Brent crude gains modestly, buoyed by summer driving season and anticipated inventory drop.
  • Geopolitical tensions and weak U.S. consumer sentiment raise concerns over future oil demand growth.
Light Crude Oil Futures

In this article:

Oil Steady as Chinese Data Balances Demand Hopes

Oil prices held steady on Monday, reflecting mixed signals from Chinese economic data, which highlighted a rocky recovery for the world’s largest crude importer. While the summer driving season in the northern hemisphere suggested a potential boost to demand, it was offset by downbeat economic indicators from China.

At 09:47 GMT, Light Crude Oil futures are trading at $78.09, up $0.04 or +0.05%.

Chinese Economic Data Impact

Monday’s economic reports from China painted a mixed picture. Retail sales exceeded forecasts due to a holiday boost, but other key metrics, including industrial output and fixed-asset investment, indicated slower growth. Additionally, oil refining activity in China fell to its lowest rate this year due to maintenance shutdowns, raising concerns about the country’s overall demand for crude.

Market Performance

Global benchmark Brent crude futures were slightly up . West Texas Intermediate (WTI) crude futures edged higher. This performance comes after both benchmarks posted their first weekly gains in a month, driven by expectations of a significant drop in oil inventories with the onset of the summer driving season.

Influence of OPEC and IEA Reports

Last week, reports from OPEC and the International Energy Agency (IEA) provided some optimism, despite differing views on the strength of oil demand growth for the remainder of the year. OPEC’s forecast for robust demand in 2024 has faced skepticism due to its vested interests, while the IEA’s more conservative outlook suggests a need for strong economic recovery in China to sustain demand growth.

U.S. Consumer Sentiment and Geopolitical Concerns

The recent drop in U.S. consumer sentiment to a seven-month low in June has also added a bearish sentiment to the market, raising doubts about the resilience of American consumer spending amid rising interest rates and cost-of-living pressures. Additionally, geopolitical tensions remain a concern, with potential for escalation in the Middle East following increased cross-border fire between Israel and Lebanon’s Hezbollah.

Market Forecast

Given the current balance of positive and negative influences, the short-term outlook for oil prices remains cautiously bullish. The anticipated increase in demand from the summer driving season and potential inventory drawdowns support a positive trend. However, continued weak economic performance in China and global geopolitical risks could limit significant price advances. Traders should monitor Chinese economic data closely, as any signs of stronger recovery could provide further support for oil prices.

Technical Analysis

Daily Light Crude Oil Futures

Light crude oil futures are trading in a holding pattern for a fourth straight session on Monday as investors continue to assess the mixed supply/demand picture. Prices are currently straddling the 200-day moving average at  $77.78. Trader reaction to this long-term indicator is likely to set the tone today.

A sustained move under $77.78 will indicate the presence of sellers with the first downside target the short-term pivot at $76.41.

Holding above $77.78 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the 50-day moving average at $79.16. Look for resistance on the first test, but anticipate an upside breakout if buyers regain control.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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