20 October 2025,05:15
Daily Market Analysis New
20 October 2025, 05:15
*Oil prices plunged to fresh multi-month lows below $56 as supply risks eased and demand concerns deepened.
*The Israel–Hamas ceasefire and hostage releases reduced fears of regional supply disruptions, removing a key support for prices.
*Slowing global growth and renewed U.S.–China trade tensions cloud consumption prospects, keeping oil’s near-term bias tilted to the downside.
Oil markets faced substantial selling pressure last week, with West Texas Intermediate (WTI) crude sliding to a fresh low since May, breaching the $56.14 mark. The downturn reflects a fundamental shift in market dynamics, driven by a confluence of easing supply fears and a deteriorating demand outlook.
On the supply side, the risk premium associated with Middle East disruptions has notably diminished. The ceasefire agreement between Israel and Hamas and the subsequent release of hostages have alleviated immediate concerns over potential supply shocks from one of the world’s most critical oil-producing regions.
However, the more persistent bearish pressure stems from a gloomy demand forecast. Economic growth in key consuming nations—including China, the Eurozone, and the United States—is showing signs of deceleration, which is expected to suppress energy consumption. This outlook is further darkened by renewed trade tensions between Washington and Beijing, which threaten to slow global economic activity and, by extension, dampen oil demand.
All eyes are now on the delayed U.S. Consumer Price Index (CPI) reading due this Friday. As a crucial gauge of inflation and economic health, the data will heavily influence the Federal Reserve’s policy path and the U.S. dollar’s strength, making it a pivotal catalyst for oil prices in the near term. The prevailing market sentiment suggests that without a significant improvement in demand fundamentals or a fresh supply disruption, the path of least resistance for oil remains downward.
Oil prices remain entrenched within a steep downtrend channel, having registered a 1.73% decline last week. The market structure is decidedly bearish, with the immediate focus on the critical support level at the $56.20 mark. A decisive break below this threshold would signal a continuation of the sell-off, opening a path toward lower technical targets.
The bearish price action is supported by deteriorating momentum indicators. The Relative Strength Index (RSI) is poised to breach into oversold territory, reflecting intensifying selling pressure. Concurrently, the Moving Average Convergence Divergence (MACD) continues to edge lower after having already crossed below its zero line. This technical confluence indicates that bearish momentum is not only present but is actively gaining strength, aligning with the prevailing negative market bias. The path of least resistance remains firmly to the downside.
Resistance Levels: 57.70, 59.85
Support Levels: 56.15, 54.95
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