Crude oil price eased on its losses on Thursday as the markets found some calmness in the Swiss regulators’ move to throw a financial lifeline to Credit Suisse. Even so, concerns on oil demand in the US , the commodity’s leading consumer, remains high. This comes amid the fears of a deepening crisis in banks across the world.
US demand concerns
US is the top consumer of crude oil worldwide. As such, the lingering concerns over the commodity’s demand in the country are largely behind the losses recorded in recent sessions.
On Wednesday, brent futures dropped to a level last seen in December 2021 amid jitters over a deepening crisis for banks globally. Granted, Credit Suisse’s financial lifeline by the Swiss regulators has brought some sought of calmness to the financial markets. Even so, the sentiment remains fragile; an aspect that is evident in recent crude oil price movements.
Notably, increases in crude oil inventories in the US have added to the ongoing concerns regarding the demand of crude oil in the US. EIA’s weekly inventory report showed that the stockpiles resumed its build in the week that ended on 10th March.
Crude oil stocks rose by 1.55 million barrels compared to the estimates of 1.188 million. In the prior week, the inventories had dropped by 1.694 million barrels; ending the streak of 10 straight weeks of builds.
However, with regard to gasoline inventories, EIA reported a decline of 2.061 million. The figure is higher than the forecast drop of 1.820 million and prior week’s draw of 1.134 million barrels. Besodes, gasoline production declined to average at 9.1 million per day in the past week.
Brent crude oil price prediction
On Wednesday, the benchmark of global oil – Brent futures- extended its losses to 71.77; a level last recorded on 21st December 2021. While it has eased on the decline in early Thursday trade, its plunge below the psychologically crucial zone of 80.00 signals that the bears are in control.
Since the beginning of last week, crude oil price has dropped by about 14%. A look at its daily chart shows the asset trading below the 50 and 200-day exponential moving averages. These technical indicators point to further losses in the ensuing sessions.
Ahead of the Fed interest rate decision, the crude oil market may remain choppy as is the case with the broader financial markets. In the short term, the range between 71.24 and 77.17 will be worth watching.
The bulls will need to attract enough buyers to break the resistance at 77.17 for an opportunity to boost crude oil price to and above the crucial zone of 80.00. On the flip side, 71.24 will likely remain a steady support for a while longer; especially as traders await further cues from the Fed interest rate decision. However, further concerns over the crude oil demand in the leading consumer may push the prices lower to 69.50.
