Daily Analysis US Oil - 14 July 2023

On Thursday, several oilfields in Libya were shut down due to a protest by a local tribe following the kidnapping of a former minister. Additionally, Shell temporarily suspended loadings of Nigeria's Forcados crude oil due to a potential leak at a terminal. The disruption in Libya has halted the production of an estimated 370,000 barrels per day (bpd), while the Nigerian outage is expected to result in a loss of 225,000 bpd.

The price of WTI (West Texas Intermediate) has recently broken out above the resistance level at 72, indicating a potential shift in the oil market's direction. This breakout comes after a period of consolidation between 62 and 72 over the past two months. Presently, oil is encountering a resistance level of 76.00, and there is a chance of a correction, leading to a possible pullback towards 74.30.

Furthermore, Russian oil exports have significantly decreased. If this downward trend continues into the following week, it could potentially drive prices higher. Notably, Russian oil exports are expected to be reduced by 500,000 bpd in August.

Supporting the price of oil, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) released reports on Thursday, predicting a recovery in oil demand during the second half of the year, particularly in China, despite broader macroeconomic challenges.

In addition, Saudi Arabia and Russia, the world's largest oil exporters, have agreed this month to further deepen oil production cuts that have been in place since November last year, providing additional support to crude prices.

Oil reached a level of 77.25, where the 200-day moving average (200MA) acted as a resistance level, similar to the previous occurrence. This suggests that a correction back toward 74.20 is a possibility.