Crude Oil on the Edge: Demand Weakness and Key Data Fuel Bearish Momentum

The recent downtrend in crude oil prices reflects a blend of technical and fundamental drivers, as easing supply concerns in the Middle East and weaker-than-anticipated demand growth have pressured prices. Since peaking at $78.27 per barrel, oil has entered a bearish phase, breaking key support levels and showing signs of sustained downward momentum. Beyond market-specific fundamentals, upcoming key economic indicators, such as the US nonfarm payrolls report, are expected to play a significant role in shaping broader financial markets, which could influence crude demand projections. These indicators, along with shifts in global demand—especially in Asia—and upcoming OPEC+ production adjustments, are set to influence crude oil’s near-term price trajectory, making it a closely watched market in the weeks ahead.

Tuesday 16:00 (GMT+2) – USA: CB Consumer Confidence (USD)
Tuesday 16:00 (GMT+2) – USA: JOLTS Job Openings (USD)
Wednesday 02:30 am (GMT+2) – Australia: CPI q/q (AUD)
Wednesday 14:15 (GMT+2) – USA: ADP Nonfarm Employment Change (USD)
Wednesday 14:30 (GMT+2) – USA: Advance GDP q/q (USD)
Thursday 03:30 am (GMT+2) – China: Manufacturing PMI (CNY)
Thursday 04:30 am (tent) –(GMT+2) – Japan: BOJ Policy Rate (JPY)
Thursday 14:30 (GMT+2) – Canada: GDP m/m (CAD)
Thursday 14:30 (GMT+2) – USA: Core PCE Price Index m/m (USD)
Thursday 14:30 (GMT+2) – USA: Unemployment Claims (USD)
Friday 14:30 (GMT+2) – USA: Nonfarm Employment Change (USD)
Friday 16:00 (GMT+2) – USA: ISM Manufacturing PMI (USD)

Since reaching a high of $78.27 per barrel, crude oil prices have softened due to a combination of easing concerns over potential supply disruptions in the Middle East, increased inventory levels, and slower-than-expected demand growth in key markets.
On October 14, a decisive breach of $71.44 opened the way for further reductions in crude oil prices. The peak at $75.99 did not surpass the previous high, leading prices to drop below $71.44 and creating a technical reversal, known in technical analysis as a failure swing. Additionally, prices fell below the 20-period and 50-period Exponential Moving Averages (EMAs), which intensified the downward pressure.
Furthermore, the Momentum oscillator indicates values below the 100 mark, and the Relative Strength Index (RSI) is below the 50 level, both of which signal sustained negative momentum in the near term.

If buyers gain control of the market, traders may shift their focus to the following four potential resistance levels:
68.37: The first level of resistance is projected at 68.37, which aligns with the daily low reached on October 18.
69.40: The second price target is seen at 69.40, corresponding to the weekly support S1, calculated using the standard Pivot Points methodology.
70.92: The third price objective is estimated at 70.92, representing the weekly Pivot Point, PP estimated using the standard methodology.
73.22: An additional price target is established at 73.22, corresponding to weekly resistance R1, calculated using the standard Pivot Points methodology.

If sellers maintain control of the market, traders may focus on the following four key support levels:
65.85: The initial support level is identified at 65.85, representing the 161.8% Fibonacci Extension drawn from the low point of 68.37 to the high point of 72.45.
65.07: The second support level is seen at 65.07, reflecting the daily low from September 10.
61.77: The third support level is positioned at 61.77, aligning with the 261.8% Fibonacci Extension drawn from the low point of 68.37 to the high point of 72.45.
55.17: An additional downside target is noted at 55.17, corresponding to the 423.6% Fibonacci Extension drawn from the swing low of 68.37 to the swing high of 72.45.

Crude oil prices fell as concerns over a Middle East risk premium eased following limited escalations between Israel and Iran, with neither side targeting critical oil infrastructure. Brent futures dipped 5.3%, briefly touching $71.99 per barrel before stabilizing. The focus now shifts back to subdued global demand, particularly in Asia, where OPEC+ production cuts are set to unwind gradually starting in December. China’s slower-than-expected recovery in oil demand, despite economic stimulus efforts, continues to weigh on the market, with Asia’s crude imports trailing last year’s levels.

Crude oil prices have declined from their recent peak of $78.27 due to easing Middle East supply concerns, increased inventories, and lagging demand growth, especially in Asia. Technical indicators show continued bearish momentum, with key resistance and support levels in focus for traders. Upcoming economic data, including the US nonfarm payrolls, will further impact market dynamics, likely influencing crude demand projections in the near term.