Crude Holding Above Support

Crude prices are seeing a muted start to the week through early trading on Monday, though the futures market has managed to hold above the 67.45 level support for now. A weaker US Dollar through the back end of last week has helped prices recover some of the losses suffered through early September, though sentiment remains fragile. Concerns around the Chinese demand backdrop have been a key headwind for crude price in recent months. Additionally, ongoing developments in the Russia – Ukraine war and the conflict in the Middle East remain key threats to near-term price forecasts. Looking ahead this week, the September FOMC meeting is expected to be a key driver for markets also.

USD on Watch

This week, oil prices could see a continued recovery if the US Dollar weakens materially on a larger Fed rate cut and/or a more dovish outlook from the bank. Traders will also be watching the latest set of Chinese oil import figures. The IEA recently slashed its Chinese demand outlook for the year, now forecasting demand at just 200k bpd, down from 700k bdp in its last outlook. As such, any weakness in this week’s figures could easily see crude falling lower once again while any upside surprise should help revive demand for crude.

Technical Views

Crude

The rally in crude has seen the market recovering back above the 67.45 level, with price now attempting to get back above the broken bear channel lows. While above 67.45, focus is on a continued recovery and a test of the 72.61 level next. This is a key pivot area for the market with bulls needing to get back above this level to alleviate near-term bearish risks.