- Investors expect fuel demand to go down amid a possible recession.
- Russia is finding ways to keep its oil exports up by focusing on emerging economies.
- CL price is testing the May 19 lows in the charts.
Crude oil futures (CL) prices continued to collapse on Thursday as major economies faced a possible recession that would dampen demand. Crude oil futures are currently trading at the lowest levels since mid-May. It has also come to the market’s attention that recent EU sanctions against Russian oil have had little impact on Russian crude supply.
Analysts from Haitong Futures wrote: “With more data proving that Russian crude supply is less affected by sanctions than most people have previously estimated, the supply side may see a larger-than-expected increase in the near term.”
President Vladimir Putin said Russia would focus its oil exports on emerging economies. Russia also exported more oil products to China in May, up by 55% from last year.
A report by Reuters also shows that India is providing safety certification for ships managed by a subsidiary of a top Russian shipping group, Sovcomflot. This development has enabled oil exports to India and other countries, keeping the Russian oil supply up in the global economy.
This certification by India provides the last link in the paperwork needed for Sovcomflot’s tanker fleet to stay afloat and deliver Russian oil to the rest of the world.
Meanwhile, in the US, Joe Biden’s bid to temporarily suspend the federal gasoline tax was received positively, but the good news was not enough to sustain high oil prices.
“The news temporarily boosted oil product prices, but it was later viewed that even if the gasoline tax were suspended, retail prices would remain high, making it difficult to stimulate demand,” Fujitomi’s Saito said.
Crude oil futures (CL) technical forecast:
Looking at the 4-hour chart, we see the price pushing lower and trading below the 30-SMA, showing bears are in control. The RSI is trading below 50, also favoring bearish momentum. The price is currently consolidating above the June 22 lows. At this point, the price might fail to break these lows and push higher to retest the 30-SMA support or break below and push lower.
The bias will remain bearish if the price stays below the 30-SMA and the RSI keeps trading below 50.
