Crude Oil: Critical $67 Support Under Threat Amid China Slowdown, Rising US Output
2024.12.11 05:14
- WTI crude teeters near a critical support level.
- Weak Chinese demand and rising U.S. output weigh heavily on prices.
- OPEC+ measures face growing pressure to counter bearish momentum.
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is under pressure, with WTI prices flirting dangerously close to the pivotal $67 per barrel mark. This level, repeatedly tested by buyers, now stands as the last line of defense against a potential wave of bearish momentum.
If sellers breach this critical support, a cascade of supply-driven declines could target the $60 mark. A confluence of factors—weakening Chinese demand, rising U.S. drilling activity, and OPEC+ output policies—has created a tug-of-war that keeps traders guessing.
China’s Slowdown and Its Ripple Effect
China, once the global engine of oil demand, is grappling with slowing economic growth, raising red flags across the market. With growth projected to slip below 5% annually, Beijing’s efforts to reignite its economy are falling short.
Investors are closely watching for the next stimulus package, expected early next year, hoping it will reverse this trend. Until then, China’s waning appetite for crude remains a bearish drag on prices.
U.S. Drilling Resurgence Gains Momentum
Across the Pacific, the U.S. oil industry is ramping up. The Baker Hughes recently climbed to 482, marking the highest levels since October.
With Republican leadership likely to champion increased domestic production under the “drill, baby, drill” mantra, the upward trend in drilling activity shows no signs of slowing.
The nomination of Chris Wright to head the Department of Energy only strengthens the case for expanded production in the year ahead.
OPEC+ Struggles to Shore Up Prices
Meanwhile, OPEC+ has extended its production cuts until at least April, delaying planned increases to stem falling prices.
While this move provides some short-term support, it may not be enough to counteract broader market dynamics. The group retains flexibility for deeper cuts or other measures, but whether it can outmaneuver bearish forces remains uncertain.
Technical Outlook: A Bearish Pattern Emerges
From a technical perspective, WTI crude is locked in a descending triangle formation, a classic bearish pattern. Prices hovering between $67 and $65 per barrel risk breaking lower, opening the door to deeper declines toward the $60 level.
However, a breakout above $73 could negate this scenario, signaling a potential sideways trend in the $65-$73 range.
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