Crude Oil sees second day of losses after IEA and OPEC point to oversupply

• Crude Oil sees sharp correction halt after firm talks from Israel’s Galant.
• Markets see IEA reporting oversupply still continues for at least until New Year.
• The US Dollar Index orbits around 103.00, though it faces resistance on the upside after two false breaks.

Crude Oil is experiencing a second consecutive day of decline on Tuesday following the publication of the monthly report from the International Energy Agency (IEA). As of the time of writing, it has lost nearly 7% in the past week. On Monday, the Washington Post published an article that implied Israel would restrict its targets to military positions and avoid targeting Iranian oil facilities. The headline that is temporarily halting the precipitous decline in Crude Oil is the firm words of Israel’s Minister of Defence, Yoav Gallant, who stated that Israel would respond deadly and precise against Iran.

After the Organisation of the Petroleum Exporting Countries (OPEC) revised its demand growth forecast for the third time in a succession in its monthly report on Monday, the IEA report ultimately contributes to additional losses. A significant correction in oil prices is currently underway due to a persistent oversupply and reduced geopolitical tensions.
The US Dollar Index (DXY), which monitors the performance of the Greenback against six other currencies, is currently hovering at approximately 103.00 and is striving to increase. Nevertheless, the DXY has been unable to surpass the resistance level at 103.18 for a second day, which has raised red flags. A abrupt correction in the DXY could result from another close below that level and the alleviation of geopolitical tensions in the Middle East.
Crude Oil (WTI) is currently trading at $69.70, while Brent Crude is trading at $73.67 at the time of writing.

Oil news and market fluctuations: The oil market remains saturated.

• According to Reuters, Israel’s Minister of Defence, Yoav Gallant, has stated that “Israel will respond to Iran in the near future with a deadly and precise response.”
• loomberg reports that the IEA and OPEC have finally reached an agreement and are currently experiencing an oversupply in the market, which has been a long time coming.
  
  
• The IEA stated in its monthly market report that OPEC’s crude output decreased by 650k barrels per day (bpd) from a month prior to September, to 26.72m bpd, as a result of lower volumes from Libya, as reported by Reuters.
  
  
• The IEA reports that global oversupplies are counteracting geopolitical hazards to oil output in the Middle East and other regions. The substantial surplus is anticipated to persist in the New Year under these circumstances, provided that there is no substantial disruption, according to Reuters.
• The weekly statistics from the American Petroleum Institute (API) are rescheduled to Wednesday in anticipation of the Columbus Day festivities on Monday.

Technical Analysis of Oil: Additional negative developments are anticipated.

The IEA has delivered a second significant strike to crude oil. Once more, the primary point to remember is that there is an abundance of product, which is sufficient to cover any production voids that may have arisen, such as those in Libya. At the very least, additional downward movements in the price of oil may occur, as the IEA report indicates that there will be additional declines in demand until the New Year.

If Crude Oil is to regain its previous level of $75.00, it will face a difficult recovery. Initially, the pivotal level at $71.46, which was sufficient to halt the falling dagger on Monday, must be reclaimed through a daily close above it. From there, the initial significant obstacle may be the substantial technical level at $75.30, which is accompanied by the 100-day Simple Moving Average (SMA) and several critical lines.

On the other hand, the pivotal level of $71.46 that was previously mentioned has now been converted to resistance and is no longer considered to be a source of support. Rather, speculators should examine the price at $67.11, which was sustained in May-June 2023. In the event that that level is breached, the year-to-date low will be under pressure at approximately $64.75, followed by the 2023 low at $64.38.