Oil futures: Crude rebounds from lows, finds support levels
Quantum Commodity Intelligence – Crude oil futures Thursday finally showed some positive momentum following a week's worth of losses, finding cautious support after dipping to fresh weekly troughs and at one point challenging 2024 lows.
Front-month Oct24 ICE Brent futures were trading at $77.04/b (1930 GMT), compared an intraday low of $75.77/b and Wednesday's settle of $76.05/b, which in turn was the lowest close since early January.
At the same time Oct24 NYMEX WTI was trading at $72.88/b versus Wednesday's settle of $71.93/b.
The rebound was seen more of a technical bounce, with the $6/b price retreat from last week's August highs enough to tempt buyers back into the market.
Broader sentiment was still seen as relatively negative, although potential support levels have been established.
"Crude oil market sentiment remains under pressure as China's economic slowdown and the rapid adoption of EVs and hybrid cars reduce fuel demand," said Ole S Hansen, Head of Commodity Strategy at Saxo Group, commenting prior to the price rebound.
"Refinery margins, the key driver for crude demand, remain weak in Europe and the USA, making it increasingly unlikely that OPEC+ will begin to unwind voluntary cuts from October," added Hansen.
OPEC+ voted to start unwinding some voluntary cuts in Q4 at its June meeting, but expectations are increasingly moving towards a deferral.
The US economy also received a knock after the Labor Department sharply revised the number of jobs added in the April 2023 to March 2024 period, slashing it from 2.9 million to 2.1 million new positions filled.
"The market is now going from pricing in a stronger economy to a potential hard landing, which is why oil prices are reluctant to move higher," said Phil Flynn of The Price Futures Group.
Revisions
The usually more upbeat Goldman Sachs has also joined the wave of negative revisions, saying the slowdown in China's oil demand growth could mean crude oil prices slipping to as low as $68/b next year.
Goldman had been bullish crude prices in recent months compared to some other analysts, maintaining a $75-$90/b price target for Brent through next year as a structural shortage of supply due to OPEC+ output cuts.
Investors largely ignored what was potentially an upbeat Energy Information Administration (EIA) report, as commercial crude inventories dropped 4.6 million barrels last week in what has been a 30 million barrel summer drawdown.
US gasoline inventories also fell to a fresh 2024-low last week as low fuel prices helped stimulate demand, while middle distillate stocks were in retreat.
Wednesday's attack on an oil tanker in the Red Sea led to only the briefest of uplifts but was quickly brushed off by investors.
The week's price retreat also comes despite Middle East ceasefire talks stumbling, as mediators told the Associated Press that Hamas was unlikely to accept the current 'bridging proposal' that would leave Israeli forces inside Gaza.
Elsewhere, investors turn to Fed Chair Jerome Powell, who is due to close the Jackson Hole Fed gathering on Friday with a hotly-anticipated speech that should offer up clues on a September rate cut.
