Oil Remains Steady On Strong Dollar & Weak China Economy Data Weigh

After falling for two days due to significant global headwinds caused by the rising dollar index, soaring US bond rates, and China's economic statistics, oil prices steadied. After falling 2.6% in the first two sessions of the week, West Texas Intermediate remained barely changed at $81 per barrel. At 00:01 GMT, Brent crude futures climbed by 3 cents to $84.92 a barrel, while WTI jumped by 5 cents to $81.04. Tuesday saw a decline in the price of crude oil as poor economic statistics, even after Beijing's surprise interest rate drop, heightened concerns about China's economic recovery.

Before economic headwinds prevent global demand growth in 2024, the International Energy Agency (IEA) cautioned that OPEC+ supply curbs might deplete crude oil reserves in the remaining months of this year, potentially driving prices even higher. As a consequence of OPEC and its subsidiaries, reducing their oil output, there are now fewer supplies of oil on the market, which has led to a recent spike in oil prices, according to sources.

The rising dollar and clues of rebounding US inflation put pressure on crude oil on Monday morning, while worries about slowing Chinese growth also dampened the mood. The IEA predicted last week that the world's oil consumption peaked in June at a record-breaking 103 million barrels per day and may reach new heights this month. In the previous week's forecast, the International Energy Agency projected record global demand and tightening supply, which sustained increases and helped prices reach a seven-week winning streak, which was the longest such run since 2022, according to sources.

The windfall tax on exports of locally produced crude oil has been raised by the Union Ministry of Finance domestically to Rs 7,100 per tonne. The windfall tax on locally produced crude oil for the previous two weeks was Rs 4,250 per tonne. The price rise would take effect on August 15th.

Commenting on the outlook of MCX Crude Oil, the research analysts of ICICI Sec said, "MCX Crude oil is likely to move in the band of 6800-7050. Only a move below 6800 could weaken the price towards 6700. On the contrary a move above 7050 would open the door for 7200 levels."

Crude oil futures on the Multi Commodity Exchange (MCX) with an expiration date of August 21 were last trading 0.78 percent down at Rs 6,880 per barrel, having fluctuated between Rs 6,802 and Rs 6,915 per barrel during the day. This compares to the previous close of Rs 6,934 per barrel.

Crude oil prices fell slightly in early trade on Wednesday, extending losses from the previous session, as the lingering impact of negative economic data from China, the world's largest oil importer, overshadowed falling US stocks. The July activity report has prompted some economists to warn that China, the world's largest oil importer, may struggle to fulfil its 5% growth target for the year unless further fiscal stimulus is provided.

Crude Oil has broken through the rising trendline support, signalling weakness. It has begun to trade below its critical 100 EMA, which is located about 6834 levels on the hourly chart. The 200-EMA in the hourly chart is at 6725 levels, below which it can fall to the immediate support area of 6590-6530 levels, said Aamir Makda Commodity & Currency Analyst at Choice Broking.

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