Oil continues to slide lower
Crude oil suddenly became a newsworthy talking point yesterday as Brent fell below $70 per barrel to trade at its lowest level since December 2021. Front-month WTI also fell again, taking it back to levels last seen in May 2023. No one is willing to stand underneath this torrent of selling, as significant buyers continue to stand aside, even after last week’s decline which saw Brent lose 10% and WTI 8% to record their worst week in eleven months. Having said that, prices are a touch firmer this morning on concerns that Tropical Storm Francine could disrupt supply. But the daily MACDs for both Brent and WTI show that oil has fallen even further into oversold territory and momentum remains to the downside. This downtrend, which began in April, reasserted itself in July and which has accelerated over the past fortnight, feels relentless. There has been no change in the dynamics which have driven prices lower: supply remains plentiful, while evidence of a slowdown in global demand growth continues to stack up. That won’t change just because the Fed stands ready to cut rates by 25 basis points. There will come a time when oil is ready to rebound. But timing that turnaround will require more luck than skill. Triggering it will require deep pockets.
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