Crude oil outlook: WTI hits new 2023 high

Crude oil outlook: Investors continue to ignore demand concerns
OPEC+ cuts continue to offset worries over China, demand
WTI technical analysis: Prices at ‘overbought’ levels

WTI oil prices reached its highest levels since last November, breaking above the April high of $83.50 briefly, before coming off its best levels. Traders will be watching to see how oil prices will close the session today. The OPEC+ ongoing supply cuts are continuing to offset concerns over demand. But will WTI manage to climb to $85 and higher?

Crude oil prices came off their best levels in reaction to the latest crude oil inventories report, showing a surprisingly large build of 5.9 million barrels of crude last week. However, the other aspects of the report were strong as refinery utilization rate increased sharply and stocks of oil products dropped.

Crude oil outlook: investors continue to ignore demand concerns

So far, investors have chosen to ignore demand concerns. We have seen weakness in global manufacturing sector, although so far this hasn’t impacted oil prices in a meaningful way. Chinese markets have struggled all year due to weakness in data there. Next week, we will get more updates on the health of the world’s second largest economy with the release of industrial production and retail sales among a few other data pointers on Tuesday. This week, we saw consumer prices come in at an annual rate of -0.3% (deflation). While falling Chinese prices is good news on the inflation front, CPI in deflation territory is indicative of a weak economy. This was highlighted in the trade data showing a 12.4% drop in imports from last year in July. But if we see next week’s data deteriorate, then this could raise recession alarm bells and weigh on prices amid demand concerns.

Crude oil outlook: WTI technical analysis

The fact that WTI has broken the post-OPEC high of $83.50 made in April means that people who had been bearish or sceptical of the group’s efforts working, have been proven wrong. As more bearish speculators now step aside, oil prices should continue trending higher for as long as there are no major demand worries. So, a move up to $85 looks increasingly likely from here. But in the short-term, don’t be surprised to see a dip as prices are clearly overbought, and many risk assets have struggled this week.

Source: TradingView.com

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.