The price of oil has since early this year been moving sideways, trading in a range between $82 and $72 per barrel.
Facing oversupply and lower-than-expected energy consumption in China after its reopening, crude’s downtrend has held firm.
“Oil prices stagnated this week as traders confront bearish trends including rising US stockpiles and a rebound in demand that hasn’t lived up to expectations.
“US crude inventories have grown by almost 24 million barrels in the last two weeks, adding to an already oversupplied market,” Bloomberg reported.
The New York-based financial media outlet added that data from the Energy Information Administration (EIA) used as an indicator of US demand for oil was at a low.
“Meanwhile, a proxy for US demand – the four-week average of gasoline product supplied – was at the second-lowest seasonal level since 2014,” it said.
OilPrice.com reported: “China has reopened its doors following its long zero-Covid policy. But now governments and energy firms around the world are waiting to see what this means both for the energy industry and global supply chains.
“Experts are uncertain if the reopening of China’s borders means that business will resume as usual or whether ongoing disruptions will be seen due to years of closures and industry challenges.
“Now that many [industrial and movement] activities will resume, experts are worried that the current global oil output will not meet the needs of the Asian superpower.
“The IEA estimates oil deliveries to increase by 1.1 million bpd [barrels per day] to reach 7.2 million bpd during 2023. Producers in major oil-producing regions, such as the US, Brazil and Guyana, are expected to increase their crude output throughout the year to meet the rise in demand.
“But uncertainties around the world’s oil needs make it difficult to ensure the necessary oil supply.”
Technical analysis indicates that the price of oil is still running below the 200-day moving average, with Monday’s morning trading session above $75 per barrel, which is near the lower weekly range of $72 per barrel.
For this week’s trading recommendation, oil investors could continue selling oil in the short term when the price is $76 per barrel, setting the stop-loss function at $78 per barrel and the take-profit at $72.