Oil Prices Surge Amid Surprises from China

Supply cuts by Saudi Arabia and Russia kept the WTI Crude Oil Futures (NYMEX: CL) afloat amid macroeconomic concerns in China. However, demand for oil remains robust, with Chinese Imports rebounding from -12.4% to -7.3%, ahead of the forecasted -9%. Additionally, the US Energy Information Administration reported a substantial drawdown of 6.3 million barrels in the past week, bringing oil inventories to their lowest levels since December 2022.

Oil prices reached their highest in 10 months, a surge precipitated by Riyadh and Moscow’s joint commitment to prolong their voluntary supply cuts until year end, which amount to a combined reduction of 1.3 million barrels per day (bpd). Meanwhile, the likelihood of US interest rates remaining elevated has made acquiring crude oil in other currencies a more costly endeavour, thereby gravely impacting demand. Will a hawkish tone continue to flood the oil market, or will the WTI crude oil futures bounce to new heights?


An ascending channel pattern has formed on the 4H Chart, with the WTI crude oil futures reaching a 10-month high. As the 50-day moving average line diverges further away from the 100-day moving average line, the price action may attempt to retest the $87.80/BLL major resistance. In this case, the Futures could propel to new heights, with a move in line with the channel’s upper boundary, possibly marking the continuation of an uptrend.

However, a drop in buying volume may encourage a pullback in an attempt to restore equilibrium between supply and demand. In this case, the $85.40/BLL support at the 23.60% Fibonacci Retracement could be a point of interest in driving downside momentum towards the channel’s lower boundary.


The WTI Crude Oil Futures edged higher on the backdrop of a rise in China’s imports, which exhibited an underlying increase in demand against further supply cuts from Saudi Arabia and Russia. If the Futures continue to tick up, the $87.80/BLL major resistance may affirm the continuation of the ascending channel pattern. However, dwindling buying volume may encourage a pullback and edge the price action towards the $85.40/BLL support at the 23.60% Fibonacci level.

Sources: TradingView, EIA, Reuters

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