Oil Price Talking Points
The price of oil[1] slips to a fresh weekly low ($82.53) amid a larger-than-expected rise in US inventories, and crude may face a larger pullback over the remainder of the month as the Relative Strength Index (RSI) falls back from overbought territory to indicate a textbook sell signal.
Oil Price Susceptible to Larger Pullback as RSI Sell Signal Emerges
The price of oil[2] continues to pull back from the monthly high ($85.41) as fresh data prints coming out of the US dampen the outlook for consumption, with crude inventories expanding for the third time this month.
US stockpiles increased 4.267M in the week ending October 22 amid forecasts for a 1.914M rise, and it remains to be seen if the Organization of Petroleum Exporting Countries (OPEC) will respond to the rise in crude inventories as the most recent Monthly Oil Market Report (MOMR) reveals that “world oil demand is estimated to increase by 5.8 mb/d in 2021, revised down from 5.96 mb/d in the previous month’s assessment.”
The MOMR emphasizes that “the downward revision is mainly driven by lower-than-expected actual data for the first three quarters of this year,” with the report going onto say that “the world is expected to consume 96.6 mb/d of petroleum products this year.”
Nevertheless, the MOMR points out that “world oil demand growth is unchanged at 4.2 mb/d” for 2022, and OPEC and its allies may remain reluctant to boost production as “global demand next year is seen averaging 100.8 mb/d.”
In turn, current market conditions may keep the price of oil afloat ahead of the next OPEC and non-OPEC Ministerial Meeting on November 4 as the group stays on track to boost “overall production by 0.4 mb/d for the month of
