The OPEC+ seems to be intentioned to maintain oil prices above the $70 mark, but even with the Saudi Arabia additional voluntary production cut of 1 million barrels per day (bpd) beginning in July, with the possibility of extension based on market conditions, and the other members of OPEC+ extending their production cuts throughout 2024, oil prices keep falling.
While the OPEC+ supply cuts may generate short-term spikes, it looks more and more evident that we are in a recessionary cycle, and the demand side is influencing heavily the oil market. The last surprising production cut back in April was completely faded and prices tumbled back to the $64 support from a $83 high. Now, the production cut in June was again faded and prices fell to $67 from the $75 high after the cut.
We are likely to see the oil market ranging maintaining a bearish bias with some short-term bullish moves caused by OPEC+ cuts and maybe even from the rate cuts in China. It’s a tough market to trade at the moment.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil basically ranges in lower and lower levels. First it was around the $90 level, then around the $80 level and now around the $70 level. The OPEC+ seems to do a good job in limiting the downside for the oil prices as we may have witnessed much lower prices if it wasn’t for the production cuts.
The level to watch now is the $75 level as a break above it may trigger a bigger rally towards the $82 resistance. On the downside, a break below the $64 support would spell trouble for the oil market and we could see a quick fall into the $57 level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has recently bounced from the $67 level and it’s now looking at the $74 resistance zone. The speculation of more expansionary monetary policy from China may give the oil prices a boost in the short-term as Chinese policymakers are trying to bolster demand. If we keep seeing worse employment data in the US though, the prices should continue to fall.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a support turned resistance zone at the $70 level where we can also find the 61.8% Fibonacci retracement level for confluence. The buyers are likely to pile in if the price breaks above the level and target the $74 resistance area. The sellers, on the other hand, should lean on this level looking for another fall into the $67 low and eventually target a breakout.
See also the video below:
