XTIUSD is moving in Descending channel and market has reached lower low area of the channel
WTI Falls to $81 as Energy Market Concerns Persist
West Texas Intermediate (WTI) US Crude Oil has hit a bump in the road, dropping to $81 per barrel. The energy market is facing several challenges, causing uncertainty and volatility. Let’s dive into what’s going on and what this means for the market.
API Report Shows Crude Oil Drawdown
Weekly Declines Continue
The American Petroleum Institute (API) has reported a second consecutive weekly decline in US Crude Oil stocks. For the week ending July 5, there was a drawdown of 1.9 million barrels. This follows a significant 9.163 million barrel decline the previous week, which was a steep drop. The forecast had anticipated a much smaller decline of 250,000 barrels, so this larger drawdown was unexpected.
Distillate Stocks Surprise
In addition to the crude oil drawdown, US Distillate Stocks, which are crucial for diesel and home heating and cooling production, saw an increase of 2.3 million barrels. This was a complete miss compared to the forecast, which had predicted a decline of 740,000 barrels. This unexpected increase in distillate stocks has added to the market’s unease.
Chinese Demand Falls Short
Lower Than Expected Demand
China, one of the world’s largest consumers of crude oil, has not met the market’s expectations for increased demand in 2024. Earlier in the year, there were hopes that Chinese demand would bolster the market, but these hopes have not materialized. The anticipated uptick in Asian fossil fuel usage has not occurred, leaving the market disappointed.
Impact on Bullish Momentum
The lack of increased demand from China has hindered bullish momentum in the crude oil market. Traders were banking on this demand to drive prices up, but with China not stepping up as expected, the market has remained soft. This has kept crude oil prices tepid, struggling to gain any significant upward momentum.
XTIUSD is moving in Symmetrical Triangle and market has fallen from the lower high area of the pattern
Tropical Storm Beryl’s Limited Impact
Storm Downgraded
Tropical Storm Beryl, initially feared to disrupt US Crude Oil markets, was downgraded from a category 1 hurricane. This downgrade significantly reduced the storm’s potential impact on the market. Traders had anticipated more disruption, but the storm’s reduced severity meant that the expected bullish push did not occur.
Market Reactions
The storm’s limited impact kept WTI bids on the low side. Traders had initially feared significant disruptions, which would have driven prices up. However, with the storm not causing as much disruption as expected, the market remained subdued. This, coupled with the other factors at play, has kept crude oil prices from gaining any significant bullish momentum.
Summary
WTI’s decline to $81 per barrel highlights the current challenges in the crude oil market. The API’s report of consecutive weekly drawdowns, the unexpected increase in distillate stocks, lower than expected demand from China, and the limited impact of Tropical Storm Beryl have all contributed to the market’s struggles.
The crude oil market remains in a state of flux, with several factors pulling prices in different directions. While there were hopes for a bullish push earlier in the year, these have not come to fruition. The market continues to face uncertainty, and it remains to be seen how these dynamics will play out in the coming weeks and months.
Stay tuned to the latest updates, as the energy market is constantly evolving, and new developments could shift the landscape once again.
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