Oil Prices Slip on Inventory Build & IEA’s Upgraded Supply Outlook

  • USOil
    (${instrument.percentChange}%)

USOIL Analysis

Continued hostilities the Middle East, this key energy hub, have helped USOil make a good start to the year. It takes another crack at the pivotal 38.2% Fibonacci of the Q4 slump, which bring the 84.90 handle in the spotlight, but we are cautious around the ascending prospects. Any strength appears to be driven by supply disruptions, rather than demand creation, a force that has its limitations.

In fact the International Energy Agency (IEA) believes that the pace of demand expansion is "set to decelerate further", to 1.2 million barrels per day (mbpd) this year (from +2.3 mbpd in 2023, according to today's monthly report). More to it, the agency believes that supply should "more than eclipse" the demand rise. IEA hiked its supply growth forecast to 1.7 mbpd (from +1.5 mbpd previously) [1]. Furthermore, Wednesday's data from the US Energy information Administration revealed a massive jump in inventories last week, to the tune of twelve million barrels.

USOil rejected the critical 38.2% Fibonacci for second time this year. This keeps the December lows in play (67.69), but strong catalyst would needed for a test.

Nikos Tzabouras

Senior Financial Editorial Writer

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 25 Jul 2024 https://www.iea.org/reports/oil-market-report-february-2024

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