CRUDE OIL (LCOc1) ANALYSIS
- Breaking news - lower crude oil prices[1] for Asia.
- Crude demand forecast set to increase.
- Symmetrical triangle remains in focus - key levels being tested.
CRUDE OIL FUNDAMENTAL BACKDROP
The major crude oil[2] export from Saudi Arabia “Arab Light” is in focus today as state owned Saudi Aramco cuts prices for the October shipment to Asia – excluding the U.S. and Europe. The price per barrel or Official Selling Price (OSP) was reduced from $1.70 to $1.30 surprising market expectations which forecasted a much smaller markdown.
Declining Chinese PMI[3] data last week (see calendar below) may have added pressure on the Saudi’s decision after COVID-19 continues to plague economies around the world. This will likely be transitory after which the Chinese market should recover and increase crude oil imports, while the cheaper price should further supplement buyer interest.
Source: DailyFX Economic Calendar[4]
The demand forecast from OPEC’s August monthly oil market report shows an increase in demand for crude oil[5] heading into early 2022 (refer to graphic below). OPEC+ and their decision to increase production monthly falls in line with the above OPEC forecast but challenges are almost certain to crop up along the way.
BALANCE OF SUPPLY AND DEMAND (2021 – 2022):
Source: OPEC
A recovering U.S. dollar[6] helped pull crude prices marginally higher after Non-Farm Payroll (NFP)[7] data last week.
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TECHNICAL ANALYSIS
BRENT CRUDE (LCOc1)DAILY CHART
Chart prepared by Warren Venketas[9], IG
The daily crude oil chart shows minimal movement today reflecting broader financial markets as the U.S. celebrates labour day.
