Oil prices were largely unchanged in early trading on Tuesday, with Brent crude futures sitting at $71.82 a barrel, down 1 cent, and U.S. West Texas Intermediate (WTI) at $68.07, up 3 cents by 0158 GMT.
Despite downtrend, crude oil appears to be trading at key support level, with the price closing at 67.913 as it slid from recent highs around 70.284.
Picture: Crude oil trades around key support at 67.85, as seen on the VT Markets app.
The immediate support level appears around 67.850, which aligns with recent lows. Should this level fail to hold, it could open up further downside towards the next support near 67.00.
The price would need to breach the 68.40 mark on the resistance side to signal any potential recovery or relief in selling pressure.
This stability follows a turbulent two-day period where both contracts fell over 5%, driven by mounting oversupply concerns and tempered hopes for growth from China’s recent 10 trillion yuan ($1.40 trillion) debt package.
Market participants were left unimpressed by the stimulus effort of China, which analysts feel lacks the scale needed to boost growth meaningfully.
Traders are now eyeing the Organization of Petroleum Exporting Countries (OPEC) monthly report due out later today, with any adjustments in the demand forecast of OPEC being the main focus, especially through 2025.
If the report signals further downward revisions in demand, it could add additional pressure on prices as the oversupply narrative strengthens.
The physical oil market also appears better supplied in the near term. Analysts at ING noted a recent shift in prompt time spreads for Brent and WTI towards contango, a condition where prompt contracts are priced lower than future contracts.
This contango structure typically suggests that immediate supply is outpacing demand, a factor likely to keep near-term price gains limited.
Further with the U.S. dollar has gaining strength, dollar-denominated commodities like oil becomes more costly, dampening demand and gains of the black gold.
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