Crude Oil continues to be supported amid a confluence of positive supply and demand drivers although the strong momentum from the beginning of the month faded ahead of the key $80 level. On the supply side, the tensions in the Red Sea are still present and overall, there’s still a high geopolitical risk in the Middle East. Moreover, Reuters reported yesterday that OPEC+ may extend the voluntary output cuts into Q2 or even into year end.
On the demand side, the recent economic data has been showing a reacceleration in activity which is supported by the rate cuts expectations and the end of the tightening cycle. On top of that, China finally started to take more decisive actions with the PBoC recently surprising with a bigger than expected RRR cut and with the biggest 5-year LPR cut ever.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil lost some momentum recently ahead of the key $80 resistance and started to consolidate just below it. The buyers have been leaning on the red 21 moving average to position for a breakout with a better risk to rewards setup. The sellers, on the other hand, continue to defend the resistance with a tight risk above it targeting a drop into the major trendline.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action just beneath the key resistance zone. The price is now trading right around the resistance, so we can expect the sellers to start piling in to target a drop into the 75.57 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs, but if the price were to pull back again from here, we will find them at the 75.57 support.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the price now near a trendline where we can also find the confluence of the red 21 moving average and the Fibonacci retracement levels. This is where the buyers are likely to step in with a defined risk below the trendline to position for the break above the key resistance. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and target the 75.57 support.
Upcoming Events
Tomorrow we will see the US PCE and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI. Weak data is likely to weigh on Crude Oil in the short term while strong data should give it a boost.
