Oil prices declined on Thursday, August 24 under pressure from the previous day’s weak data from major economies, due to which investors were worried about the demand outlook and also as the US dollar strengthened ahead of a speech from US Federal Reserve Chair Jerome Powell.
Federal Reserve officials and other global central bankers were headed to Jackson Hole, where Powell will address the symposium on Friday. Investor caution on the eve of his remarks lifted the safe-haven dollar. A costlier greenback makes oil more expensive for holders of other currencies, impacting the overall demand growth.
Brent crude fell 16 cents, or 0.2 per cent, to $83.05 a barrel. US West Texas Intermediate crude fell 12 cents, or 0.2 per cent, to $78.77 a barrel. At their session low, both sessions had been down by more than a dollar, according to news agency Reuters.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a September 19 expiry, were last trading lower by 0.24 per cent at ₹6,539 per bbl, having swung between ₹6,425 and ₹6,556 per bbl during the session so far, against a previous close of ₹6,555 per barrel.
What’s driving crude oil prices?
-US officials are also drafting a proposal that would ease sanctions on Venezuela’s oil sector, allowing more companies and countries to import its crude oil, if the South American nation moves toward a free and fair presidential election, according to Reuters.
-A larger than expected fall in US crude inventories helped limit further losses. US crude inventories declined by 6.1 million barrels in the week to August 18 to 433.5 million barrels, according to Reuters.
-US business activity approached the stagnation point in August, with growth at its weakest since February. But data also that showed labor market conditions remained tight despite the Fed’s aggressive interest rate hikes.
-On the supply side, Iran’s crude oil output will reach 3.4 million barrels per day (bpd) by the end of September, the country’s oil minister was quoted as saying by state media, even though US sanctions remain in place.
-Meanwhile, analysts expect Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries and its allies (OPEC+), to extend its 1 million bpd voluntary production cut into October to help support the market.
-Both China and India, the world’s biggest and third-biggest oil importers, cut imports from Russia and Saudi Arabia in July. India’s July crude oil imports from Russia dipped for the first time in nine months, while inbound shipments from Saudi Arabia tumbled to their lowest in 2-1/2 years following OPEC+ cuts. Meanwhile, China’s inbound shipments from the kingdom fell to their lowest in 13 months in July.
Technical View
Religare Broking has neutral/sideways sentiments on MCX Crude Oil. ‘’MACD bearish divergence suggest possibility of weakness. Extended dip below 6,410 may induce further weakness. However, steady gains above 6,610 may strengthen the price.,” said the brokerage firm in its research report. Religare sees technical levels between ₹6,200 – ₹7,020. The turnaround is seen at ₹6,610.
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Updated: 24 Aug 2023, 10:33 PM IST