USOIL Tries to Pause its 4-Week Losing Streak Helped by US Production Disruptions, but it May Not be Easy

  • USOil
    (${instrument.percentChange}%)

USOIL Analysis

USOil staged a rebound over the last couple of weeks, helped by the production disruptions in the Gulf of Mexico, due to hurricane Ian. According to Thursday's final report by the US Bureau of Safety and Environmental Enforcement (BSEE), 157,706 barrels/day of oil were shut-in, accounting for approximately 9.12% of the region's production. [1]

Also supportive for prices, was yesterday's report by the US Energy Information Agency (EIA) for the week ending September 23, which showed that commercial crude oil inventories dropped by 0.2 million barrels/day over the previous week. However, at 430.6 million barrels, inventories are about 2% below the five year average for this time of year. [2]

Despite these supply side issues, the push-and-pull between supply and demand jitters continues, since recession fears have been reignited in the aftermath this month's hawkish actions by major central banks, in their effort to control inflation.

The US Federal Reserve hiked rates by another massive 75 basis points last week and essentially gave up on a soft landing, while updated GDP figures are expected today, before Friday PCE inflation.

USOil tries to pause its four-week losing streak, thanks to the 2-day recovery, which has brought the key 86.80-87-10 region in the spotlight. This includes the EMA200 and the descending trendline from the summer high. However, it does seem ready to take them out and the upside looks unhospitable.

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Despite recent upbeat mood, black gold faces difficulties today and still heads towards its fourth consecutive losing moth, while the week started with new lows. The downside bias is clear and USOil is in high risk of 2022 lows (74.26), although steeper decline below the 200Weeks EMA (blue line) at around 71.00 may prove harder.

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 28 Sep 2022 https://www.bsee.gov/newsroom/latest-news/statements-and-releases/press-releases/bsee-hurricane-ian-activity-final-report

2

Retrieved 26 Nov 2022 https://ir.eia.gov/wpsr/wpsrsummary.pdf

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