Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Market update: IEA lowers demand growth estimate, oil recovery slows

Marginal Cushing stock build could limit oil upside, IEA revises oil demand growth lower; brent crude oil flirts with the 200-day SMA and WTI testing major zone of resistance into the end of the week.

Source: Bloomberg

Marginal Cushing stock build could limit oil upside

US oil stocks in Cushing Oklahoma rose slightly at the end of last week, which may cap oil upside towards the end of this week. Oil storage figures have recovered in February after January witnessed multiple drawdowns. Storage figures are just one part of a multi-factor fundamental mix that is in play at the moment. One of the major determinants of the oil price is the concern around the global economic outlook, particularly as the UK and Japan confirmed their respective economies entered into a recession in the final quarter of 2023.

Europe’s economy has narrowly avoided a technical recession, while Chinese authorities are desperate to reverse the deteriorating investor sentiment and stock market malaise. A significant proportion of oil demand growth comes from China each year, but with another year of sub-par economic growth forecast for the world’s second largest economy, the potential for oversupply plagues the oil market.

EIA and OPEC forecasts for oil demand growth are diverging after the International Energy Association (IEA) revised its estimate lower, from 1.24 million barrels per day (bpd) to 1.22 million bpd. Meanwhile, OPEC on Tuesday maintained its loftier 2.25 million bpd estimate, highlighting the increasing uncertainty around global supply and demand dynamics.

Brent crude oil flirts with the 200-day SMA

The Brent crude chart below shows the oil market’s V-shaped recovery (highlighted in purple) as the commodity’s price tracked the Chinese stock market before the week-long Lunar New Year Holiday.

Oil prices appear to have found resistance around $83.50 but are yet to close above the recent swing high of $84. In recent trading sessions, oil has recovered from a sharp decline which occurred around the same time the Chinese stock sold off rapidly.

In the absence of a further bullish catalyst from here, prices may consolidate or head lower. The price at $83.50 has proven difficult to overcome since the end of last year, suggesting a return towards $77 is not out of the question.

Brent crude daily chart

Source: TradingView

WTI testing major zone of resistance into the end of the week

US crude, like Brent, also finds itself surrounded by resistance. In this case, it is the intersection of the major long-term level of $77.40 and the 200-day simple moving average (SMA). A daily close above this marker highlights channel resistance. If resistance proves too tough to conquer, prices may continue to oscillate within the range by heading towards channel support and $72.50.

WTI daily chart

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Speculate on commodities

Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1

  • Wide range of popular and niche metals, energies and softs
  • Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
  • View continuous charting, backdated for up to five years
Find out more

1In the case of all DFBs, there is a fixed expiry at some point in the future.

Turn knowledge into success

Practice makes perfect. Take what you’ve learned in this commodities strategy article, and try it out risk-free in your demo account.

Try it out

Ready to trade commodities?

Put the lessons in this article to use in a live account. Upgrading is quick and simple.

  • Deal on our wide range of major and niche commodities
  • Protect your capital with risk management tools
  • Enjoy some of the best spreads on the market – Spot Gold from 0.3 points
Create live account

Inspired to trade?

Put the knowledge you’ve gained from this article into practice. Log in to your account now.

Log in now

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.