USOIL Mixed Despite China’s GDP Rebound

  • USOil
    (${instrument.percentChange}%)

USOIL Analysis

The Chinese economy grew by 3.9% in the third quarter compared to year ago, as Monday's delayed data showed. Furthermore, Industrial Production strengthened by 6.3% y/y in September, from +4.2% prior, but Retail Sales eased to 2.5% y/y, from +5.4% previously.

Despite the strong readings from the world's second biggest economy and second largest consumer of oil, prices are inconclusive this week, as the push-and-pull between supply and demand continues. OPEC+ had announced a whopping 2 billion barrels/day production cut earlier in the month, but fears over demand persist.

On its latest monthly report, the International Energy Agency (IEA) reduced its demand growth forecast for the current and the next year, partly to the OPEC+ action, noting that higher prices "may prove the tipping point for a global economy already on the brink of recession". [1]

USOil started October with its best weekly performance since February and tries for its first profitable month since May. Since then however, prices have been retreating and are subdued during the current week, as markets await PCE inflation and preliminary Q3 GDP form the US, later in the week.

Having rejected the 38.2% Fibonacci of the October high/low slide and the EMA200, USOil is in risk of fresh lows (82.06), although a catalyst will be required for further drop that would bring 74.26 back in the spotlight.

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On the other hand, the commodity runs a profitable month and has the ability to push again for the 86.40-87.15 region. However, we are cautious for a sustained rise above 87.85, as the 50% Fibonacci and the daily Ichimoku cloud may contain the ascending aspirations.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 31 Jan 2023 https://www.iea.org/reports/oil-market-report-october-2022

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