Crude Oil sold off last week following the disappointing OPEC+ meeting where they failed to agree on a group cut and proceeded with voluntary output cuts of about 2.2 million bpd. The other bearish catalysts include the latest Baker Hughes weekly count where US oil rigs rose continuing to point to expanding US production. All of the above coupled with the weakening demand outlook caused by the restrictive monetary policies and softening economic data continue to support the downtrend in Crude Oil with the cycle lows being the natural target.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil pulled back into the 38.2% Fibonacci retracement level near the key trendline and sold off ever since as the OPEC+ decision underdelivered on expectations. The bias remains strongly bearish with the price printing lower lows and lower highs and the moving averages being crossed to the downside. The next target for the sellers should be the cycle low around the $64 level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is struggling a bit breaking decisively below the recent low at $72.50. We might get a little pullback from this level after the recent selloff. The buyers might lean on this level with a defined risk below it to position for a rally back into the major trendline. The sellers, on the other hand, should take advantage of the likely bounce to short again at better levels targeting a break below the low.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a divergence with the MACD right at the low. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might see a bounce into the recent $74 resistance where the sellers should pile in with a defined risk above it to position for a break below the low. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline.
Upcoming Events
Today we have another US labour market report with the release of the US ADP data. Tomorrow, it will be the time for the US Jobless Claims figures, while on Friday we conclude the week with the NFP report. Weak data is likely to weigh on Crude Oil as fears of a recession would dampen the demand outlook even more. On the other hand, strong figures should provide some support in the short-term.
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