WTIOil:Strong Support at 89; Short-term Resistance at 93
From a technical standpoint, we see that crude oil futures have found support at $89 and face resistance at $93. On September 21st, after a retracement to $89, we observed that bearish momentum did not result in a significant volume-driven downward move, leading to a rapid rebound.
Oil prices remained stable on Friday, but concerns about profit-taking and the market's balancing act between supply worries due to Russia's fuel export ban and future demand uncertainties tied to potential interest rate hikes led to a weekly decline in oil prices.
With the decline in the number of oil rigs in the United States, West Texas Intermediate (WTI) crude oil futures (CLc1) rose by 40 cents or 0.5% to $90.03 per barrel. This benchmark index recorded a 0.03% decline for the week, marking its first weekly drop in four weeks.
Dennis Kissler, Senior Vice President of Trading at BOK Financial, stated, "As refineries go into maintenance and rising rates further pressure the market, investors are expecting softness in demand for October."
Concerns about supply constraints have led to over a 10% increase in these contracts over the past three weeks. Federal Reserve officials have warned that further rate hikes may be necessary even after voting to keep the federal funds rate steady at this week's meeting. Fed Governor Michelle Bowman stated, "Inflation remains too high, and I expect further increases in the federal funds rate and the maintenance of a restrictive level of rates for some time may be appropriate." She noted that potential further increases in energy prices are a specific risk she is monitoring. Higher rates can increase borrowing costs, potentially slowing economic growth and reducing oil demand.
Meanwhile, Russia has temporarily banned gasoline and diesel exports to most countries, which is expected to cause supply tensions. According to TASS news agency, Russia's oil transport company suspended diesel shipments to major ports in Primorsk and Novorossiysk in the Baltic and Black Seas on Friday.
In a report, the Royal Bank of Canada noted that this ban would "bring new uncertainty to an already tight global refined oil supply picture, and affected nations will seek to raise the prices of alternative suppliers' goods." On Friday, Russian wholesale gasoline prices on the St. Petersburg International Commodity Exchange fell nearly 10%, while diesel prices dropped by 7.5%. Baker Hughes, an energy services company, reported that the number of U.S. oil drilling rigs, a leading indicator of future production, also decreased by 8 this week to 507, the lowest level since February 2022.
U.S. refineries typically undergo maintenance after heavy operations during the fall to meet fuel demand during the summer driving season. Data from IIR Energy shows that offline refining capacity for this week is expected to reach 1.4 million barrels per day, compared to 800,000 barrels per day last week. The U.S. Commodity Futures Trading Commission reported that fund managers increased their net long positions in U.S. crude oil futures and options as of the week ending September 19th.
Oil prices remained stable on Friday, but concerns about profit-taking and the market's balancing act between supply worries due to Russia's fuel export ban and future demand uncertainties tied to potential interest rate hikes led to a weekly decline in oil prices.
With the decline in the number of oil rigs in the United States, West Texas Intermediate (WTI) crude oil futures (CLc1) rose by 40 cents or 0.5% to $90.03 per barrel. This benchmark index recorded a 0.03% decline for the week, marking its first weekly drop in four weeks.
Dennis Kissler, Senior Vice President of Trading at BOK Financial, stated, "As refineries go into maintenance and rising rates further pressure the market, investors are expecting softness in demand for October."
Concerns about supply constraints have led to over a 10% increase in these contracts over the past three weeks. Federal Reserve officials have warned that further rate hikes may be necessary even after voting to keep the federal funds rate steady at this week's meeting. Fed Governor Michelle Bowman stated, "Inflation remains too high, and I expect further increases in the federal funds rate and the maintenance of a restrictive level of rates for some time may be appropriate." She noted that potential further increases in energy prices are a specific risk she is monitoring. Higher rates can increase borrowing costs, potentially slowing economic growth and reducing oil demand.
Meanwhile, Russia has temporarily banned gasoline and diesel exports to most countries, which is expected to cause supply tensions. According to TASS news agency, Russia's oil transport company suspended diesel shipments to major ports in Primorsk and Novorossiysk in the Baltic and Black Seas on Friday.
In a report, the Royal Bank of Canada noted that this ban would "bring new uncertainty to an already tight global refined oil supply picture, and affected nations will seek to raise the prices of alternative suppliers' goods." On Friday, Russian wholesale gasoline prices on the St. Petersburg International Commodity Exchange fell nearly 10%, while diesel prices dropped by 7.5%. Baker Hughes, an energy services company, reported that the number of U.S. oil drilling rigs, a leading indicator of future production, also decreased by 8 this week to 507, the lowest level since February 2022.
U.S. refineries typically undergo maintenance after heavy operations during the fall to meet fuel demand during the summer driving season. Data from IIR Energy shows that offline refining capacity for this week is expected to reach 1.4 million barrels per day, compared to 800,000 barrels per day last week. The U.S. Commodity Futures Trading Commission reported that fund managers increased their net long positions in U.S. crude oil futures and options as of the week ending September 19th.
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