IronFX: WTI continued trading north on Monday, breaking above the resistance (now turned into support) zone of 42.00 (S1).Nevertheless, the advance was stopped by the key obstacle zone of 43.30 (R1), and then the price retreated.
I still believe that the short-term trend is negative and that the recovery started on the 2nd of August was just a corrective phase.
I would now expect the bears to take advantage of the 43.30 (R1) resistance area and to aim for another test near the 42.00 (S1) barrier.
A dip below 42.00 (S1) is possible to open the way for our next support level of 41.20 (S2). Our short-term oscillators support the case for the bears to take control again.
The RSI turned down after it hit resistance near its 70 line, while the MACD, although above both its zero and trigger lines, shows signs of topping.
Zooming out to the daily chart, I still believe that the medium-term outlook has turned negative. This is another reason I believe that the bears will eventually prevail again.
• Support: 42.00 (S1), 41.20 (S2), 40.45 (S3)
• Resistance: 43.30 (R1), 44.30 (R2), 45.00 (R3)
World Oil Demand
In 2016, world oil demand is anticipated to grow by 1.20 mb/d from 2015, which is largely unchanged from last month’s projections. Total oil consumption in 2016 is anticipated to be around 94.18 mb/d.
US oil demand, mainly supported by rising gasoline requirements, came up strong in March 2016, recording the highest monthly y-o-y growth since August 2015, at 0.4 mb/d or 2.0%. To a large extent, this growth originates in the road transportation sector and particularly gasoline.
The 2016 US oil demand growth depends on several factors, such as the economy, the degree of substitution with other commodities and the oil price environment.
The latest March 2016 Canadian data showed overall declines in oil demand. The 2016 projections for Canadian oil demand remain unchanged from those reported last month and foresee a slight decline as compared to 2015.
European oil demand continued to grow in the first four months of 2016, particularly during 1Q16. The main reasons behind these figures are the improving economy and colder weather, in addition to lower fuel oil prices in the road transportation sector.
The European oil demand outlook for 2016 remains slightly positive, mainly as a result of improving industrial production and a continuously growing auto market.
Downside risks also continue to exist and are of a financial nature: unsolved debt issues in a number of countries in the region. The general expectations for the region’s oil demand during 2016 remain cautiously optimistic and are largely related to developments in the economy.
Japanese oil demand decreased sharply by 5.6% y-o-y, continuing the declining trend seen each month since April 2015. Japanese oil demand growth has been deeply in the negative during the first four months of the year with declines largely dominated by electricity generating fuels and naphtha.
The outlook risks for 2016 are skewed to the downside as a result of rather gloomy economic forecasts and the relatively high likelihood of a the re-start of operations in some of the country’s nuclear plants during 2H16.
World Oil Supply
Non-OPEC oil supply for 2016 remains unchanged from the previous report, despite various changes in different regions; it is forecast to contract by 0.74 mb/d to average 56.40 mb/d. Downward revisions were seen mainly in Canada, Brazil and Colombia.
These are offset by upward revisions in the US, the UK, Russia and Azerbaijan. Overall revisions have led to changes in all quarters in 2016, particularly to a contraction in 2Q16 of 234 tb/d, mainly due to wildfires in Canada. There was no revision to non-OPEC supply growth in 2015; it remained at 1.47 mb/d. OPEC NGLs and non-conventional oil production growth in 2016 is expected at 0.16 mb/d, to average 6.29 mb/d. In May, OPEC crude oil production decreased by 0.1 mb/d to average 32.36 mb/d, according to secondary sources. As a result, preliminary data indicates that the global oil supply decreased by 0.73 mb/d in May to average 94.51 mb/d.
Crude Oil Forecast
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