Past weak, crude oil for September delivery had a rough two weeks as it sank to its lowest level in 11 – months, down at $75 a barrel on Tuesday. This appears to have marked a near – term bottom and in the last three sessions of the week oil marked a series of increases.
Despite sinking over $10, the black gold marked a slight increase on the week to form a “hammer” bullish reversal candle pattern.
Traders continue to focus on the possibility that global growth will remain muted and also the increasing likelihood that the US economy could fall back into recession, all while the european sovereign debt debacle should weigh on sentiment in the markets.
On the fundamental side, the IEA said on Wednesday that a double-dip recession could reduce energy demands to the point where world oil markets would be in surplus next year. However, they warn that the uncertain times make predictions increasingly unreliable. “There is no justification at the present time for OPEC to think that substantially adjusting production downwards,” said David Fyfe, head of the Oil Industry and Markets Division at the IEA.
As a consequence the IEA has trimmed their forecasts for demand in the US this year, to fall by 200,000 barrels a day, or 1%.
China are also suffering from the downturn as China’s monthly apparent demand contracted on an annual basis, the first time this has happened since March 2009. “The decline coincided with evidence that China‘s economy is also slowing down and that higher end – user prices are weighing upondemand,” the IEA said.
