Crude Oil surged to new highs as the supply side got squeezed even more by resilient demand and more production cuts. In fact, the OPEC continues to forecast robust growth for oil demand in 2023 and 2024 while keeping supplies tight as Saudi Arabia and Russia extended their voluntary production cuts. Moreover, we got some extra supply side shocks from Libya and Kazakhstan recently. As long as the economies remain resilient, we might continue to see high oil prices, but this will eventually weigh on demand which is much more precarious at the moment.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that after the breakout of the key $83 resistance, Crude Oil just kept on rallying with almost no pullbacks into the $93 resistance. The price is now finally pulling back with the upward trendline being the natural target for a meaningful correction. That’s where we can expect the buyers to pile in again with a defined risk below the trendline to target a break above the $93 resistance.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Crude Oil has been diverging with the MACD as it was approaching the key $93 resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, a break below the black trendline should confirm a reversal and we will likely see more sellers piling in to target the major upward trendline.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is reacting to the black trendline and the previous swing low support. This is where we can expect the buyers to step in with a defined risk below the level to target another rally into the $93 resistance where the sellers will step in again to target new lower lows.
Upcoming Events
This week has a few important economic releases that can have an impact on Crude Oil. Today, the Fed is expected to keep rates unchanged with the market focusing more on the Dot Plot and Powell’s press conference, where he’s likely to reaffirm their data dependency. Tomorrow, we will get the latest US Jobless Claims report and much worse than expected data should weigh on Crude Oil while better than expected figures are likely to keep it supported. Finally on Friday we conclude the week with the PMIs data for many major economies like the US, Eurozone and the UK. Again, weak data is likely to send the markets into risk off and lead to weakness in Crude Oil as well, while strong data should provide some relief.
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