Crude oil prices have taken a slight dip, prompting concerns among investors and analysts. As of 19:33 Beijing time on Thursday (February 15), Brent crude oil futures prices fell 81 cents to $80.79 per barrel, marking a 0.99% decrease. Similarly, U.S. West Texas Intermediate crude oil futures also fell 72 cents, or 0.94%, to $75.83.
The International Energy Agency (IEA) has indicated that demand growth is slowing this year, and U.S. crude oil inventories have increased more than expected. The IEA’s monthly oil market report released on Thursday revealed that global oil demand is losing momentum, leading the agency to cut its growth forecast for 2024 to 1.22 million barrels per day from 1.24 million barrels per day. On the supply side, the IEA estimates that supply will increase by 1.7 million barrels per day this year, higher than the previous forecast of 1.5 million barrels per day.
This news has taken a toll on oil prices, as both benchmark contracts fell by more than $1/barrel on Wednesday. The U.S. Energy Information Administration (EIA) reported that U.S. crude inventories jumped 12 million barrels in the week to February 9 to 439.5 million barrels, far exceeding the 2.6 million barrel increase expected by analysts.
“The rise in inventories is attributed to further reductions in refining operations and relatively weak demand for petroleum products,” explained SEB analyst Ole Hvalbye.
Additionally, news of the UK slipping into recession and Japan unexpectedly falling into recession late last year also weighed heavily on prices.
From a technical analysis perspective, WTI crude oil prices hit a new February high on Wednesday but have since reversed course. The current price is below the 100-day and 200-day moving averages, leading to concerns about sellers taking control of the market.
Analysts and investors are closely monitoring the situation and are waiting for WTI crude oil prices to close above the 200-day moving average to regain confidence. If this milestone can be achieved, it could signal a shift in market dynamics and potentially lead to a reversal of the recent downward trend in crude oil prices.