- WTI sees a significant drop, trading around $78.35, close to its lowest in over two months.
- Disappointing export figures from China raise alarms about potential declines in oil demand, pressuring prices.
- OPEC+ production cuts, led by Saudi Arabia and Russia, provide some support but fail to offset demand-side fears.
West Texas Intermediate (WTI), the US Crude Oil benchmark, plunged more than 2.80% on Tuesday even though Saudia Arabia and Russia underpin the oil market due to its crude output cuts. Nevertheless, weaker-than-expected exports from China triggered the fall of oil. WTI is trading at $78.35, near a two-and-a-half-month low at the time of writing.
US oil benchmark WTI drops sharply as Chinese export data fuels demand concerns, overshadowing OPEC+ production cuts
Economic data from China, particularly exports missing estimates, spurred fears that oil’s demand would be dented. This is mainly because China-based refiners cut their production between November and December, which could weigh on crude oil demand, exacerbating price declines.
Oil prices had been influenced by the recovery of the Greenback (USD), after plunging more than 1.40% last week, on speculations the US Federal Reserve (Fed), ended its hiking cycle. The US Dollar Index, which measures the buck’s performance, against a basket of six currencies, climbs 0.34%, up at 105.62.
Meanwhile, Saudi Arabia and Russia’s 1.3 million barrel cut, it’s capping WTI losses, as they have extended their plan toward the end of 2023, with estimates they could extend it through the first quarter of 2024.
WTI Price Analysis: Technical outlook
Oil’s recent uptrend is risky if sellers reclaim the 200-day moving average (DMA) at around $78.15 per barrel. Once that level is breached, the next cycle low at $77.64 would be tested, ahead of the pair extending its losses toward the July 18 daily low of $73.94. On the other hand, if WTI stays above the 200-DMA, that could open the door to challenge $80.00. Once cleared, buyers could challenge the last week’s high of $83.56.
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