MCX Crude Oil Prices approaching 1 month low Amid Weak Chinese Demand and Middle East Ceasefire Talks by Amit Gupta, Kedia Advisory
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Key Highlights:
1. Oil prices fall as Chinese demand slows due to weak economic data.
2. Ceasefire talks in Gaza add to the bearish sentiment, reducing supply risks.
3. WTI and Brent crude see a drop below key technical levels.
4. Refineries in the U.S. reduce operations, signaling lower demand.
5. Technical analysis shows potential further downside with key support levels in focus.
MCX Crude oil prices experienced a significant decline on Monday, settled down by -2.6% at 6190 driven by growing concerns over weakening demand in China and ongoing ceasefire talks in the Middle East. The world’s largest oil importer, China, has shown signs of economic strain, with customs data revealing a sharp drop in diesel and gasoline exports in July. This is coupled with a broader slowdown in industrial output and the fastest decline in new home prices in nine years, which has cast a shadow over the country’s economic prospects. The bearish outlook was further compounded by the efforts of U.S. Secretary of State Antony Blinken, who visited Tel Aviv to push for a ceasefire in Gaza. The potential success of these negotiations could reduce the geopolitical risk premium that has been supporting oil prices, leading to further declines.
From a technical perspective, both WTI and Brent crude have broken below significant support levels, with WTI falling under the 200-day Simple Moving Average (SMA) and the $77.00 mark. The Relative Strength Index (RSI) also remains below 50, suggesting that sellers might maintain control in the short term. Key support levels to watch include $74.50 and the $71.70-$72.50 zone, which could provide a temporary floor if prices continue to fall. While on MCX prices is under fresh selling as the market has witnessed a gain in open interest by 33.45% to settle at 6818 while prices are down -165 rupees, now Crudeoil is getting support at 6120 and below same could see a test of 6050 levels, and resistance is now likely to be seen at 6320, a move above could see prices testing 6440.
Action: With China’s economic challenges and potential easing of Middle East tensions, the outlook for oil prices remains bearish in the near term. Traders should closely monitor developments in both regions for further price direction. Technically prices on MCX look weak now getting support at 6120 and below same could see a test of 6052 levels as long as prices are trading below 6320.
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