Oil Price Forecast (technical analysis) from HFI - Sept 27

[dan_s]

Note that I got from HFI Research before the markets opened on September 27:
"WTI is doing precisely what I thought would take place. It's back to where it last broke down, and if my thinking is right, then the move below $67.50 was a false breakdown, which should be validated here. I think the market attempted to rebound back to the $75 level, but the technical resistance around $71 to $73 was too much. This retest was needed for the market to gain more confidence. We are doing it now, so please watch this area closely. A break below $67 would imply a downside back to $62 and possibly $55."

Bottomline: If the $67.50 support level holds, the bulls should push the trading range back up toward the well-defined trading range of $75-$80. There is no significant technical resistance until $71 and $73.

As I have posted here several times, we are in the seasonal low demand period (September & October), before demand for heating oil picks up. Oil inventories build during this period of the year. Other than the normal seasonal dip in demand, there is not a significant fundamental reason for the pullback below $70/bbl. Yes, there is less demand in China, but there is not a GLUT of oil or refined products. Big Three petroleum inventories in the U.S. are below normal for this time of year. Distillates inventories are 9% below normal.

"Despite a drop in the Brent crude oil spot price to $73 per barrel on September 6, we expect ongoing withdrawals from global oil inventories will push prices back above $80/b this month. More oil will be taken out of inventories in the fourth quarter of 2024 (4Q24) than we previously expected because OPEC+ announced that they will delay production increases until December. Those increases had been set to start in October. Although market concerns over economic and oil demand growth, particularly in China, have increased, causing oil prices to fall, OPEC+ production cuts mean less oil is being produced globally than is being consumed. We expect the Brent crude oil spot price to average $82/b in 4Q24 and average $84/b in 2025." < From EIA's Short Term Energy Outlook on 9-10-2024