Weekly Outlook on Crude Oil - 02 August 2024

Oil Prices and Market Dynamics

Oil prices saw an uptick in Asian trading on Friday but were still on track for a fourth consecutive week of losses. Concerns about slowing economic growth and demand overshadowed a brief boost from rising tensions in the Middle East. Prices had dropped sharply the previous day, ending a short-lived recovery. This decline followed weaker-than-expected purchasing managers index (PMI) data from the U.S., which amplified fears of a global economic slowdown. Additionally, disappointing economic reports from China, the world's largest oil importer, further pressured the market.

China's Economic Issues

China continues to pose significant challenges for oil markets. The Chinese government has provided limited information on its strategies to boost economic growth, creating uncertainty. As the top global importer of oil, China's economic performance is crucial for maintaining demand. The lack of clear economic policies from Beijing has added to market volatility and kept oil prices under pressure.

U.S. Economic Indicators

In the United States, the Federal Reserve hinted at a possible interest rate cut in September. However, traders are concerned that this move might come too late to prevent a significant economic downturn. This uncertainty has contributed to cautious trading and has had a dampening effect on oil prices.

Technical Outlook:

The recent price movement in crude oil has been marked by significant volatility, influenced by both fundamental and geopolitical factors. Technically, crude oil prices have been in a downtrend, reflecting four consecutive weeks of losses. On the daily scale, the prices have been trading within Symmetrical Triangle and below 200-DEMA. Moreover, the RSI is hovering near 40 levels with negative crossover.  

Here are the key technical aspects to consider:

On the NYMEX Front: 
On the downside, $72.00 per barrel may act as immediate support level for WTI crude oil. A break below this could signal further downside. On the top, $80.60 per barrel is indicating an immediate hurdle, which could act as resistance in a potential recovery. 

On the domestic front:
The key support levels are at 6250 & 6070, in MCX Crude Oil future, while on the upside, the key resistance is at around 6635 followed by 6800 mark. 
Traders are advised to keep an eye on key economic reports from major economies, especially the U.S. and China, also focus on geopolitical developments as they significantly influence oil demand and prices fluctuation. 

Important Levels: