Crude Oil Prices Fall as China Virus Cases Rise

In Tuesday’s Asia-Pacific trade, both the price of WTI oil and the price of Brent crude fell. The inventory statistics from the United States will be in the spotlight in the days ahead as China’s Covid difficulties continue. The price of WTI crude oil is in a negative technical stance below its key moving averages.

As the week got started, the price of crude oil went up due to a weaker dollar as well as supply worries, which stimulated purchasing. However, as trade in Asia and the Pacific region continues, prices for West Texas Intermediate (WTI) and Brent oil are beginning to retreat. The failure of discussions between Tehran and Washington to reach an agreement contributed to the rise in prices. The answer that Iran gave to a proposition that was offered by the European Union left Western officials feeling dissatisfied.

Iran is demanding that the International Atomic Energy Agency (IAEA) put an end to its inquiry, but the United States and the European Union would not agree to this demand. Following the comments made by US Secretary of State Anthony Blinken on Monday that a near-term solution is “unlikely,” the price of WTI recovered about one full percentage point of its previous losses. The attitude expressed by Mr. Blinken was echoed by German Chancellor Olaf Scholz. According to reports, Israel has given alarming evidence indicating that Iran is extremely near to possessing sufficient uranium of a quality suitable for use in a bomb.

The Covid-19 lockdowns in China continue to weigh heavily on the forecast for oil’s consumption. The National Health Commission said this morning that there were 1,048 newly reported cases for the month of September. Before October, it is very doubtful that Beijing would soften its position on the containment of the virus. At that point, it is anticipated that President Xi Jinping would have secured a third term in power. However, there has been a lot of talk about how in the months that would follow the National People’s Congress, there will be a progressive lifting of limitations (NPC).

For the time being, the attention of traders is focused on the inventory data that is scheduled to be released over the next few days. Data on crude oil stockpiles will be released by the American Petroleum Institute (API) on Tuesday. The report will cover the week that ended on September 9. The figures from the Energy Information Administration, which has traditionally had a greater impact on markets, are scheduled to be released the day following. The analysts forecast that the EIA report would show a decrease in crude oil stockpiles of 200 thousand barrels and an increase in distillate stocks of 633 thousand barrels.

The Technical Outlook for WTI Crude Oil

After an intraday surge came to a halt just short of the 20-day simple moving average, prices were unable to break above the 61.8% Fibonacci retracement from the move that occurred between December 2021 and March 2022. (SMA). Because prices have remained below their key moving averages and both the RSI and MACD oscillators have stalled out below their respective midpoints, the technical outlook for WTI is tilted toward a negative direction.

In the event that Monday’s strength returns and prices break over the 20-day simple moving average (the green line), the psychological level of 90 may represent a barrier to overcome before the 50-day simple moving average (blue line). A move to the downside would signal a continuation of the general downward trend. And the worst-case scenario would be a fall below the low that was reached in September, which was 81.21. This would drop prices to levels that have not been seen since early January.

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