Crude Oil got stuck in a consolidation recently as the uncertainty increased due to conflicting signals from the OPEC+ sources. In fact, we got a rally two weeks ago as some sources said that we could get deeper supply cuts at the upcoming OPEC+ meeting, but eventually Crude Oil erased most of the gains following the news that the OPEC+ meeting got delayed. The expectations are for deeper cuts or an extension to the existing ones, but given the current context, we will need surprisingly big cuts to see a rally in Crude Oil prices or else the downtrend should resume amid weakening demand and slowing global growth.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil recently has been consolidating due to the uncertainty around supply cuts and the future demand outlook. From a risk management perspective, the sellers will have a much better risk to reward setup around the 38.2% Fibonacci retracement level where there’s also the confluence with the major trendline and the key $80 level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the latest leg lower into the $72 level diverged with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a pullback and then the price started to consolidate waiting for a catalyst, which may come tomorrow with the OPEC+ meeting and the US Jobless Claims figures.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent rangebound price action between the resistance at $77 and the support at $74. This is still a bears’ market so if the price breaks to the upside the buyers will need to break above the major trendline to invalidate the bearish setup and switch the bias from bearish to bullish. The sellers, on the other hand, will pile in around the $79-80 range to position for new lows. Moreover, if the price breaks below the $74 support the sellers will increase even more the bearish bets.
Upcoming Events
Tomorrow we will get the US PCE and US Jobless Claims data with the market likely focusing more on the latter given that we already saw the latest inflation data with the US CPI report just two weeks ago. There will also be the OPEC+ meeting with expectations of deeper cuts or extension of existing ones. On Friday, we conclude the week with the US ISM Manufacturing PMI which missed expectations by a big margin the last time.
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