On the daily chart below for WTI crude oil, we can see that after the surprise OPEC+ cut and a mini rally to the top of the range at $83, the market saw an incredibly fast selloff. The bullish case is the tight supply and underinvestment, but the demand side of the equation is definitely leading, and it’s connected to a deteriorating global economy.
The global central banks tightening amid high inflation is dampening demand and it’s aimed precisely at that. The recent weaker US labour market data has also played a big role and the regional banking crisis is not helping either. It looks like the bearish trend will continue until the central banks start easing but until then we may see even lower prices.
WTI Crude Oil technical analysis
On the 4 hour chart below, we can see how the upper bound of the range acted as the top and then the third rejection from the downward trendline was the last attempt by the bulls to rally. After that we saw a big selloff with almost no pullbacks. Tonight, we also saw a flash crash that was erased soon after once the price bounced from the $64 low. The price is now overstretched, and we should see a bigger pullback probably towards the $72 zone before the next big move.
On the 1 hour chart below, we can see that a good level for the sellers would be the 61.8% Fibonacci retracement level which is just beneath the bottom of the broken range. Further downside is unlikely from here unless more regional banks fail and the US labour market data miss expectations. Today we have the Jobless Claims report and tomorrow the NFP. Watch out for these data points as they will cause big moves in the markets.
