USOIL Tries to Catch a Breath as US Seeks to Replenish its Strategic Reserves

  • USOil
    (${instrument.percentChange}%)

USOil Analysis

USOil comes from seven straight losing weeks and its worst streak in five years, largely fueled by demand fears and strong non-OPEC production. The International Energy Agency (IEA) had warned last month that the oil market "could shift into surplus at the start of 2024" [1]. The latest poor inflation report from China meanwhile, highlight the difficulties that the world's biggest oil importer faces, whereas the International Monetary Fund (IMF) expects slower GDP growth in 2024, compared to the current year. [2]

Reacting to the falling prices though, Saudi Arabia, Russia and other OPEC+ members announced additional supply cuts of 2.2 million barrels/day for the first quarter of 2024. Although these were unable to contain the price slump, they could help prevent a surplus. Moreover, the US Energy Department announced on Friday that it looks to buy up to 3 million barrels of oil, to replenish its Strategic Petroleum Reserve (SPR).

The SPR news helped USOil find some reprieve, while market optimism for rate cuts by the Fed and the ECB can also provide support. Although it may get a chance to push towards the EMA200 (77.00), it does not inspire confidence for a meaningful recovery at this stage and the upside contains multiple roadblocks. The recent losing streak has exposed USOil to the 2023 lows (63.63), but sustained weakness below it has a higher degree of difficulty. Its trajectory can be shaped by this week's US CPI data and the central bank blitz.

Trade the News: View our Economic Calendar

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 11 Dec 2023 https://www.iea.org/reports/oil-market-report-november-2023

2

Retrieved 23 Jul 2024 https://www.energy.gov/ceser/articles/us-department-energy-announces-solicitation-purchase-oil-strategic-petroleum-0

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.