Weekly Oil Report: Crude Slumps by Demand and Dollar

The first week of August brought a deeper plunge for oil. Uncertainty grew larger in markets as the outlook of demand and dollar surprised traders.

Breaking a strong resistance level at $92, WTI closed at $88.53 and Brent settled at $93.66 on Friday.

Price is currently under a yearly and monthly pivot point, probably strong enough to keep the price low.

In the daily chart, Friday’s candlestick shows a reluctance toward higher prices. WTI and Brent are making lower lows and lower highs compared to March 2022.

As seen in the 1h chart, the price is volatile between fib levels of 127% and 161%. Traders are better to observe the price direction after testing every two levels.

The change in supply and demand outlook was adequately effective on the sentiment. Fuel demand is likely to decrease as economic growth is decelerating.

On the supply side, OPEC agreed to increase the production by 100,000 bpd for September. In a steadier condition, the decision is not much noticeable but considering the demand obscurity, market can consider it an oversupply in September.

Besides demand, recent economic reports suggest that the economy may not be heading toward recession and the Fed probably continues the aggressive increase of interest rates until at least September.

Following the possibility of more increases by the Fed, Dollar continues getting stronger.

By monsoon easing down, traders have started setting new bitumen orders after a couple of passive months. Order volume is likely to improve by September.

Iran has increased bitumen price by 4.4% due to fuel and crude prices during the last two weeks. If crude slumps continue, the country may decrease the price by two weeks.

India, also, is likely to raise the price by about $45-$50.

Singapore and Iran’s bitumen price spread narrowed since Singapore prices fell back along with oil.

Iran’s current new steel drum is in the range of $395 – $405 and Singapore bulk was $543 – $547 and Korea bulk 60/80 was $498 – $502 on Friday.