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Weekly Crude Oil Prices Forecast Aug 27, 2023

Weekly Oil Prices Forecast and Technical Analysis

As shown in the chart, the price of 88 USD is considered an important resistance for the Brent crude oil, and cannot reach higher prices until it is broken. Also, 82 USD is considered a support for oil, and we have seen fluctuations between 82 and 88 in the last two weeks.

On Friday, the Brent crude oil price met with a little demand and reached 84.69 USD, and for this week as well as last week, fluctuation in the range of 82 to 88 USD is expected.

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India’s Slowing Oil Demand Growth to Weigh on Oil Prices

India’s slowing oil demand growth will act as a drag on oil prices despite consumption recently hitting record highs, Reuters market analyst John Kemp has said.

India’s oil consumption grew by ~255,000 barrels per day (bpd) during the first seven months of the current year, helping to grow total consumption to 135 million metric tons in the first seven months of 2023 compared to 128 million metric tons for last year’s corresponding period. However, that growth clip was considerably slower than 415,000 bpd posted in 2021/22 as economies rebounded from the coronavirus pandemic and lockdowns. 

In comparison, consumption growth in the U.S. clocked in at 1.0 million bpd in the first five months of 2023, although, in fairness, the U.S. consumes nearly 4x as much oil as India.

But not everybody shares that bearish view. Commodity analysts at Standard Chartered have weighed in, saying that fundamentals in the oil markets remain strong despite the recent reversal by the oil price rally following weak economic data from China.

Global oil markets remain tight, with StanChart estimating that the August global inventory draw clocked in at 2.8 million barrels per day (mb/d), with a further 2.4 mb/d draw forecast for next month. The experts have predicted that inventory tightening will remain the dominant price driver in the coming months, but have warned the markets are still capable of slipping back into the macro-driven angst that we witnessed in the second-quarter for periods.

Separately, a group of analysts have predicted that Saudi Arabia is likely to extend its voluntary 1 million-barrel oil supply cut for the third consecutive month into October amid uncertainty about supplies, five Wall Street analysts have predicted. The initial cuts appear to have worked, with oil prices climbing about 15% in the past month to about $86 a barrel.

According to StanChart, highly effective producer output restraint, led by Saudi Arabia, will create the conditions for a price rally that will take Brent prices above this year’s high at $89.09/bbl onto their Q4-average forecast at $93/bbl, with a likely intra-quarter high above $100/bbl.

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Weekly Crude Oil Prices Forecast Aug 27, 2023