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EIA study see demand growth yield in 2023, sharp decline in oil -by Ecork

WTI news and analysis

  • June Environmental Impact Assessment Report Released – Demand Growth Expected to Return in 2023
  • WTI: Key technical levels analyzed, support area within reach
  • Mixed IG customer sentiment: The recent price drop leads to a collective reversal in positioning

EIA release in June 2022

Consumers will be happy to see oil prices pull back on Friday’s drop although it may take some time before this translates into lower prices at the pumps. The issue of demand destruction resurfaced after the Federal Reserve raised interest rates by 75 basis points last week in an attempt to beat high inflation.

The continued rise in oil prices threatens to reduce the overall consumption of the commodity as individuals and companies tighten their wallets and reduce their purchases of fuel. European Union sanctions on Russian oil exports and an already restricted supply chain have exacerbated the situation. In addition, dwindling OPEC spare capacity adds further upward pressure on prices when you consider that the organization was not able to meet previous production targets.

The International Energy Agency (IEA) released its June 2022 oil market report and expects demand growth to increase in 2023 after an initial decline, rising above pre-pandemic demand levels of 101.6 million barrels per day. The rebound in demand is expected to be driven by the resurgence of Chinese economic growth to offset weaker demand from OECD countries.

The main levels of West Texas Intermediate crude oil

WTI continued to decline after hitting a high around 123.70 when looking at the CL futures continuous chart! 1. The decline comes to a strong support area (red rectangle) between 103.65 and 104.70. The area corresponds to the ascending trendline support, the 61.8% Fibonacci level and the previous low at 103.65 that acted as support in the past.

Rebounding higher, away from the support area, highlights 109.90 to 111.50 as the nearest resistance area. After that, the 2011 high of 114.83 becomes the next hurdle.

WTI daily chart

Source: TradingView, prepared by Richard Snow

IG customer sentiment sees massive shift with lower prices

In general, customer sentiment tends to shift more in the long run as markets drop and that is exactly what has happened recently. Sentiment is now close to 50/50 and therefore provides less effectiveness as a counter-indicator. IG client sentiment usually provides stronger signals when the markets are trending and sentiment skews considerably in the opposite direction.

WTI Crude Update: EIA See Demand Growth Yield in 2023, Oil Falls Sharply

Source: TradingView, prepared by Richard Snow

oil American crude: Retailer data show 52.35% of traders are net long With the ratio of buy-to-sell traders at 1.10 to 1.

We usually take a file Contrasting view of the crowd’s feelingsThe reality of the traders suggests the long net oil US crude oil prices may continue to decline.

The number of long traders is 1.41% higher than yesterday and 33.24% higher than last week, while the number of short traders is 2.75% higher than yesterday and 42.24% lower than last week.

Positioning is net less than yesterday but more net than last week. A combination of The current sentiment and recent changes give us more variance in the US crude oil trading bias.

Written by Richard Snow for DailyFX.com

Connect with Richard and follow him on Twitter: Tweet embednowFX

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