NYMEX crude oil short-term support at $70.02
International oil prices fell on Friday (May 12), and were on track to end lower for a fourth week in a row, as renewed uncertainty over the U.S. economic outlook raised concerns about the outlook for fuel demand, despite OPEC’s forecast for higher demand from China. NYMEX crude oil is looking at $70.02 under short-term support.
At 16:24 Beijing time, NYMEX crude oil futures fell 0.73% to $70.35 a barrel; ICE Brent crude futures fell 0.84% to $74.35 a barrel.
It has fallen more than 1% this week and is on track to set the longest consecutive weekly negative line since November 2021. Concerns are growing that the U.S. is headed into recession as talks over the U.S. government’s debt ceiling stall and fears of another regional bank’s crisis mount.
Tina Teng, a market analyst at CMC Markets in Auckland, said the lower inflation data pointed to weak consumer demand. “Oil is a growth-sensitive commodity that is affected by these bearish factors.”
Oil prices had risen earlier on Friday after comments from the U.S. Energy Secretary that the U.S. may buy back oil for the Strategic Petroleum Reserve (SPR) once some sales are completed in June, creating some demand expectations. The U.S. government has said it will buy oil when prices are sustained at or below $67 to $72 a barrel.
However, shares of U.S. regional bank PacWest Bancorp ( PACW.O ) plunged 23% on Thursday. The company previously said its deposits fell and it had provided more collateral to the Fed to boost its liquidity. Also, talks to raise the $31.4 trillion debt ceiling to prevent government debt defaults may not reach an agreement in time, which could lead to serious market disruption.
The oil market has largely ignored the Organization of the Petroleum Exporting Countries (OPEC) forecast for global oil demand in 2023. The forecast said demand would rise in China, the world‘s largest oil importer, but a small decline was expected elsewhere.
On the hourly chart, NYMEX crude oil is expected to fall below $70.02 and further drop to $68.83, which are the 38.2% Fibonacci retracement and 50% Fibonacci retracement of the rebound range from $63.79 to $73.88.