Advertisement
Advertisement
Oil News: Crude Oil Futures Slide as Demand Concerns Weigh on Oil Outlook
By:
Key Points:
- Crude oil futures slip as traders weigh demand worries, Fed rate cuts, and resistance at the 200-day and 50-day moving averages
- U.S. distillate stockpiles jump 4 million barrels, fueling concerns over weakening domestic oil demand.
- OPEC+ production increases and weak U.S. housing data add pressure to crude oil’s near-term outlook.
Oil Prices Slip as Demand Concerns Outweigh Fed Rate Cut
Light crude oil futures edged lower on Friday as traders weighed conflicting forces. Earlier this week, the market failed to hold above the 50-day moving average at $63.78 and then slipped through the 200-day moving average at $63.00, leaving both as resistance.
The current range runs from $61.10 to $64.41, with the 50% midpoint at $62.75 under test. To swing traders, this marks a typical correction, but to trend-followers the market’s position under both key averages signals a bearish setup.
At 10:06 GMT, Light Crude Oil Futures are trading $62.72, down $0.54 or -0.85%.
Federal Reserve Rate Cut Offers Limited Support
The Federal Reserve cut its benchmark rate by 25 basis points on Wednesday, citing labor market softness. Normally, lower borrowing costs boost demand for oil, but the effect has been muted. Traders remain focused on weakening fuel consumption signals, keeping expectations for sustained upside contained. Despite the dip, U.S. crude is still set for a second straight weekly gain, showing how cautious positioning has shaped this week’s trade.
OPEC+ Supply Plans and U.S. Inventories Pressure Market
On the supply front, OPEC+ continues to pursue production increases, adding to concerns of oversupply. In the U.S., government data showed distillate stockpiles rising by 4 million barrels, well above forecasts, raising doubts about domestic demand strength. Energy agencies, including the EIA, have flagged these demand concerns as a primary headwind, tempering bullish momentum from the Fed’s rate decision.
Weak U.S. Data Fuels Demand Worries
Economic indicators further weighed on sentiment. Single-family homebuilding slumped to a multi-year low in August, while unsold inventory piled up. Signs of consumer strain from tariffs and a cooling jobs market contrasted with ongoing corporate resilience, highlighting an uneven recovery. Analysts note that this disconnect is reinforcing the broader slowdown narrative, adding pressure on energy consumption forecasts.
Russia and Policy Comments Add Mixed Signals
In Russia, the finance ministry’s plan to shield the state budget from oil price swings and sanctions reduced fears of major supply disruptions. Comments from President Trump, preferring lower oil prices over tougher sanctions on Russia, also calmed supply risk premiums. These developments helped cap potential upside from geopolitical drivers that typically support crude.
Market Forecast: Bearish Bias with Key Levels in Focus
With demand signals softening and supply growth persisting, crude oil’s short-term outlook leans bearish. A sustained move under $62.75 would confirm this view, opening downside targets at $61.34, $61.10, and $60.77. Unless demand indicators improve or OPEC+ shifts its stance, sellers may continue to dominate near-term trade while rallies face resistance at the 200-day moving average near $63.00 and the 50-day at $63.78.
More Information in our Economic Calendar.
About the Author
James Hyerczykauthor
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
Advertisement