In the week that ended on November 15, US crude oil prices rose 0.8% and settled at $57.72 per barrel. It was the second consecutive weekly gain for WTI crude oil active futures. On November 14, after the EIA’s (US Energy Information Administration) release of its inventory data, US crude oil active futures fell 0.6%. This fall limited oil’s price upside last week. Read EIA, Iraq, Trade War: Where Could Oil Prices Move? to learn more.
IEA is bullish on oil demand
On November 15, the IEA (International Energy Agency) released its Oil Market Report. On the same day, US crude oil active futures rose around 1.6%. Based on the IEA’s data, in the third quarter, oil demand grew by 1.1 MMbpd (million barrels per day) compared to the third quarter of 2018. In the second quarter of 2019, this figure was at 0.435 MMbpd. Also, in the third quarter, China’s oil demand rose 0.64 MMbpd, contributing around 58.1% to global oil demand growth.
The report further highlighted that oil’s demand is expected to rise by 1.9 MMbpd in the fourth quarter of 2019 on a year-over-year basis. In September, OECD commercial stocks fell by 38.9 million barrels. This fall marked the first decline after five consecutive monthly rises. The report also outlined that optimism surrounding US-China trade talks had boosted crude oil prices. On a month-over-month basis, WTI crude oil active futures have risen 9.3%.
For 2020, oil’s demand is expected to rise by 1.2 MMbpd based on the IEA data. However, this figure depends on the IMF forecast for a growth rate of 3.4% in world GDP. Any slowdown in the global growth rate will impact oil prices.
US-China trade talks
Any new development around US-China trade talks is an important driver for oil prices. On November 17, Chinese media reported that US and Chinese trade representatives had held “constructive discussion.” On November 15, the Dow Jones Industrial Average surpassed the 28,000 level for the first time. The growth in China’s economy is important for oil prices.
This week, the price range of $55.72–$59.72 per barrel is important for WTI crude oil active futures. This price range was obtained using oil’s implied volatility of 29.6% on November 15 and a confidence level of 68%. We also assumed prices to be normally distributed.
Crude oil prices’ key moving averages
Last week, US crude oil active futures settled 3.2%, 3.7%, 3.1%, and 0.7% above their 20-day, 50-day, 100-day, and 200-day moving averages, respectively. Active crude oil futures rising above these moving averages could indicate further upside in prices. Moreover, this week, the 200-day moving average of $57.31 will be an important support zone.
On November 19 and November 20, the American Petroleum Institute and the EIA will release the inventory report for the week that ended on November 15. If the change in inventory disappoints market participants, active crude oil futures could test their 200-day moving averages. Today as of 6:08 AM ET, crude oil prices were almost unchanged.