The crude oil prices have had a tough ride in the past week, as they struggle to recover from their biggest monthly loss since October 2020. At the time of writing, US West Texas Intermediate (WTI) crude was trading lower at $69.47 per barrel. Brent crude was also lower at $72.81 per barrel.
Oil Prices Fundamental Outlook
The resurgence of coronavirus infections, alongside the contagious Delta variant, saw the demand for oil prices decline. China’s lockdown restrictions played a major role in the decline of oil prices. Being the second-largest oil consumer in the world, the surging virus cases in China cut down on demand.
According to data by the Energy Information Administration on Wednesday, US weekly crude inventories fell by 7.2 million in the last week.
Hurricane Ida has shut down nearly 80% of the Gulf of Mexico’s oil and gas output. This is nearly 1.7 million barrels per day of oil production. Oil refineries in Louisiana could probably take weeks to reopen, which will weaken crude demand further.
The Organization of the Petroleum Exporting Countries and allied producers including Russia (OPEC+) remain optimistic about the global economic recovery. The group raised its demand forecast for 2022. On Wednesday, OPEC+ agreed to maintain their existing policy of gradual oil output increases. The group decided to increase production by 400,000 barrels per day.
Crude Oil Technical Analysis
The four-hour chart indicates that the US West Texas Intermediate (WTI) crude oil has been under intense pressure. The WTI crude has been hovering below the crucial level at $70.00. It hit an intraday high of $70.25 before pulling back.
The WTI crude has been moving above the 25 and 50-day moving average. It is also above the 50-day moving average, which is usually a bullish indicator.
Therefore, as local refineries and the dollar continues to weaken, crude oil prices are likely to edge higher. On the flip side, a move below the key support at $64.90 will invalidate the bullish sentiment.