Oil Stumbles Following IEA Report

IEA sounds pessimistic

In its most recent oil market report, the International Energy Agency (IEA) gave a pessimistic assessment of oil demand growth prospects amid a worldwide economic slowdown.

– losses in Nigeria, Kazakhstan, and Russia are countered by increased supply from Libya, Saudi Arabia, and the UAE,
– in August, Russian oil shipments increased by 220,000 bpd to reach 7.6 million bpd, a 390,000 bpd decline from pre-war levels,
– in August, global oil output increased by 790,000 bpd to 101.3 million bpd.
– due to the weakening Chinese economy and the slowdown in OECD nations, demand growth is expected to stop in 4Q22 but to pick up in 2023 by 2.1 million barrels per day.

In other news, the European Union (EU) proposes to raise more than 140 billion EUR for member states to tackle the energy crisis, European Commission President Ursula von der Leyen said in a  State Of European Union address to the European parliament.

Bearish trend intact

It looks like the medium-term downtrend remains intact as oil is regularly posting lower lows and lower highs. As a result, rallies are quickly sold off.

The support is still near 85 USD, followed by the recent cycle lows at 81.50 USD. If oil drops below that level, we might see a quick decline below 80 USD a barrel.

Alternatively, the price must jump above the current swing highs at around 90 USD to halt the recent bearish pressure.