USOIL Mixed as Markets Digest IEA Demand Outlook & Chinese Data

  • USOil
    (${instrument.percentChange}%)

USOIL Analysis

The International Energy Agency (IEA) upgraded its 2023 oil demand outlook, now expecting it to grow by 2.2 million barrels per day, from two mbpd previously. This is largely driven by China's recovery, which is "even stronger than previously expected" and projected to account for 60% of the global demand growth. More to it, the agency anticipates "tighter market balances" in the back-half of the year, which are "in stark contrast" to the current pessimism. [1]

However, April's economic data from the world's biggest importer of oil, have raised questions around the recovery. Today's release showed solid increases in industrial production and retail sales, but the figures were much lower than expected by markets.

Meanwhile, the US Department of Energy announced plans to buy three million barrels of oil taking advantage of the recent price slump, in order to replenish the Strategic Petroleum Reserve (SPR) which has fallen to the lowest levels since the early '80s. [2]

At the beginning of the month, USOil had slumped to the lowest levels since late 2021 due to recession fears and other factors. This looks increasingly like a bottom, given the recent surprise OPEC+ output cuts and China's reopening, but the road to it has not closed.

USOil has bounced since then, with the help of the Fed's pause hint, but will need catalyst to surpass the critical resistance area of 73.80-75.94 that would shift bias on the upside.

Trade the News: View our Economic Calendar

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 16 May 2023 https://www.iea.org/reports/oil-market-report-may-2023

2

Retrieved 16 May 2023 https://www.energy.gov/articles/us-department-energy-announces-purchases-strategic-petroleum-reserve

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.

${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}