The crude oil market has strong support at $60. A break below this level would confirm massive oversupply concerns and signal deeper market imbalances. Moreover, the timing of this breakdown is critical. The global economy is already slowing, and additional supply could worsen the situation. This drop in oil prices would put pressure on US shale producers.
If prices drop below $60, production cuts are likely. Shale economics rely heavily on price stability. A prolonged dip would trigger cost-cutting, layoffs, and reduced output. This response would reinforce the broader economic slowdown.
Moreover, the shift in OPEC+ strategy is not just about regaining market share; it represents a potential macroeconomic shock. The oversupply narrative may dominate headlines in the weeks ahead. However, oil’s breakdown is signalling something more serious.
Labor Market Data Confirms Recession Signals
Nonfarm Payrolls Miss and Unemployment Spike Raise Red Flags
The sharp decline in oil prices coincides with clear signs of labour market weakness. The chart below shows that the August Nonfarm Payrolls (NFP) disappointed with just 22,000 new jobs added. This was far below the 75,000 jobs expected. The miss confirms slowing momentum in employment growth.
