- Crude oil drops over 3% on Tuesday as concerns about China’s economy weigh on markets.
- Israel remains quiet in response to Iran’s recent attacks.
- The US Dollar Index stabilizes on Tuesday, pausing the recent decline.
Crude oil prices are accelerating their losses after the U.S. market opened, triggering a significant sell-off. Market sentiment has turned bearish due to concerns over China’s economic outlook, as no new stimulus measures were announced when China’s stock markets reopened following the Golden Week holiday. The broader commodities sector is under intense selling pressure, with investors expecting China to take more decisive actions to boost both domestic and international economic activity.
Meanwhile, the US Dollar Index (DXY), which measures the Greenback’s performance against six major currencies, has stabilized after a slight fade. Following a sharp short squeeze last week, US Dollar bears were forced out of their positions, but dollar bulls are now gradually taking profits, leading to a slow decline as the index searches for key support levels.
At the time of writing, West Texas Intermediate (WTI) crude is trading at $74.02 per barrel, while Brent crude is priced at $77.98.
Oil News and Market Movers: China Concerns Weigh on Commodities
- Russian crude exports have risen, reaching their highest level since July, according to Bloomberg data.
- Libya’s oil production has surpassed 1 million barrels per day for the first time in two months following the resolution of a political standoff, reports Bloomberg.
- Chevron has halted production at its Blind Faith platform in the Gulf of Mexico ahead of Hurricane Milton, according to Reuters.
- Chevron Corp. and Canadian Natural Resources Ltd. have finalized a $6.5 billion deal for Chevron to sell its undeveloped oil sands in Alberta, Rigzone reports.
- Hurricane Milton is advancing toward the Gulf Coast and is expected to reach Florida by Wednesday morning, based on data from the U.S. National Hurricane Center.
- The American Petroleum Institute (API) will release its weekly crude oil stockpile data at 20:30 GMT, with a 1.95 million-barrel build expected, following last week’s 1.5 million-barrel draw.
Oil Technical Analysis:
The recent sell-off in crude oil prices comes after a strong rally driven by geopolitical tensions, which have now eased slightly due to the lack of a significant military response from Israel. Combined with concerns over China and Libya’s rising output, the correction gains further traction. A deeper pullback is likely until strong support levels are reached.
Monday’s false breakout has been fully reversed by Tuesday, reaffirming key resistance levels. The descending trendline and the 100-day Simple Moving Average (SMA) at $75.72 are critical areas of resistance. If these levels are surpassed, the 200-day SMA at $77.15 is expected to limit further gains.
On the downside, former resistance levels have now turned into support. The 55-day SMA at $72.71 offers the first line of defense, with additional support at $71.46. Below that, the $70.00 psychological level and $67.11 represent the final support areas for traders looking to buy the dip.
