- Oil prices fall nearly 1% on Monday, flirting with a break below $70.00.
- Traders send black fuel lower after Chinese retail sales growth fell well short of expectations.
- Dollar Index remains below 107.00 after European PMI data triggers weaker dollar.
Crude oil falls on Monday, flirting with the round $70 level, after Chinese retail sales data for November dampened hopes for a quick recovery in the region. The 3% growth was well below consensus and the situation is set to deteriorate further as tanker rates on key routes to China are falling to the lowest level this year, pointing to still weak demand. slower in the future.
The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against a basket of currencies, is weaker on Monday amid a recovery in the Euro (a major contributor to the Index). Germany’s preliminary Services Purchasing Managers’ Index (PMI) reading for December returned to 51, moving out of contraction territory. Meanwhile, Germany’s government is expected to fall on Monday, with snap elections scheduled for February 23, 2025.
At the time of writing, Crude Oil (WTI) is trading at $70.31 and Brent Crude at $73.78.
Oil news and market movements: China shows no signs of recovery
- Rates to transport crude on the largest ships from the Middle East to China, a benchmark route, have fallen by a third this year as demand in the top importer slows and OPEC+ delays restarting idle supply, reports Bloomberg.
- The global oil market is expected to remain well supplied in 2025, according to the International Energy Agency (IEA), even as the Organization of the Petroleum Exporting Countries (OPEC) maintains production cuts and demand projections show a slight growth, Reuters reports.
- Recent crude oil import data from China suggests a rebound, although storage data also reveals an increase in volumes, Reuters reports.
- Iranian crude exports to China have been disrupted by broader U.S. sanctions on tankers, according to Vortexa Ltd., reducing flows to the OPEC producer’s most important customer, Bloomberg reports.
Technical Analysis of oil: Reality catches up
Crude oil prices are seeing their profitable rally of more than 5% halted and giving back gains on Monday after Chinese retail sales data revealed slower-than-expected growth. This adds doubt to the overall outlook for 2025, where a Chinese resurgence is one of the key factors for overall oil consumption to rise again. If President-elect Donald Trump adds all of the promised tariffs, Chinese oil demand could deteriorate further in 2025.
Looking up, $71.46 and the 100-day SMA at $71.08 are acting as firm resistance levels on the upside. On Friday, some selling pressure already developed ahead of the 100-day SMA. In case oil traders can break through that level, $75.27 is the next key level.
On the downside, it is too early to see if the 55-day SMA will recover back to $70.11. That means that $67.12 – a level the price held in May and June 2023 – remains the first solid support nearby. Should that be broken, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the 2023 low.
US WTI Crude Oil: Daily Chart
WTI Oil FAQs
WTI oil is a type of crude oil that is sold in international markets. WTI stands for West Texas Intermediate, one of the three main types that include Brent and Dubai crude. WTI is also known as “light” and “sweet” for its relatively low gravity and sulfur content, respectively. It is considered a high-quality oil that is easily refined. It is sourced in the United States and distributed through the Cushing facility, considered “the pipeline junction of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter supply and impact prices. The decisions of OPEC, a group of large oil-producing countries, is another key price factor. The value of the US Dollar influences the price of WTI crude oil, as oil is primarily traded in US dollars, so a weaker Dollar can make oil more affordable and vice versa.
Weekly oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data shows a decline in inventories, it may indicate an increase in demand, which would drive up the price of oil. An increase in inventories can reflect an increase in supply, which drives down prices. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, with a difference of 1% between them 75% of the time. EIA data is considered more reliable since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas at biannual meetings. Their decisions often influence WTI oil prices. When OPEC decides to reduce quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an expanded group that includes ten other non-OPEC member countries, including Russia.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
