Crude Oil Extends Declines On Chinese Demand Concerns, WTI Falls Below $80

By Joshua Gibson of FX Street

Tuesday, July 16, 2024 9:20 PM EDT

sunset

Image Source: Unsplash

WTI tumbled below $80.00 per barrel as Crude Oil bids crumble.
Crude Oil markets are extending a downside slide as Chinese demand slumps.
WTI bull run sputters, bids within touch range of long-term averages.

West Texas Intermediate (WTI) Crude Oil fell on Tuesday as barrel traders grow fearful at the prospect of a slowdown in Chinese demand for fossil fuels. A decline in American Petroleum Institute (API) week-on-week barrel counts helped to bolster WTI prices into a weak recovery in late Tuesday trading, but an equivalent buildup of distillate products limited bullish potential.

China recently posted a slowdown in growth figures for the second quarter, hobbling broad-market expectations of a surge in Chinese demand for fossil fuels. After spending most of 2024 waiting for an uptick in Chinese Crude Oil demand, barrel traders have flipped to concerns that limited Chinese growth won’t provide enough barrel demand to eat up overhang in global markets.

The API reported yet another contraction in overall Crude Oil supply, showing a -4.44 million barrel contraction in privately counted supplies for the week ended June 12. Despite the extended decline in barrel counts, fully-refined gasoline stocks rose 365K barrels, with an additional buildup of partially-refined distillate inventories of 4.92 million barrels as end-chain refiners struggle to keep up with the availability of Crude Oil products.

WTI technical outlook

Tuesday’s bearish break has dragged WTI further below the 200-hour Exponential Moving Average (EMA) at $81.30 as downside momentum accelerates. WTI has extended a backslide from a recent upswing that fell just short of the $84.00 handle, and US Crude Oil prices have backslid over -5.5% peak-to-trough in July.

After a failed bull run through the top end of a consolidation pattern on daily candlesticks, A low break has dragged WTI bids into touch range of the 200-day EMA at $79.07 after shedding the $80.00 key handle on Tuesday.