Crude Oil has been supported amid a confluence of positive supply and demand drivers, but the recent US data made the picture murky. In fact, 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, recently OPEC+ extended the voluntary output cuts into Q2.
On the demand side, the recent economic data has been showing a reacceleration in activity which was supported by the rate cuts expectations and the end of the tightening cycle. Last week though, the US ISM Manufacturing PMI, which is one of the most important leading indicators, missed expectations by a big margin. It might be just a blip or the recent pullback in rate cuts expectations turned the momentum around. Nonetheless, this might be enough for a bigger correction in Crude prices.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil failed to break out of the key $80 resistance zone following the miss in the ISM Manufacturing PMI. The price pulled back into the red 21 moving average where we found some buyers stepping back in to try again to break out. We can expect the sellers to lean on the resistance again with a defined risk above it to target a drop back into the major trendline around the $76 level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the buyers leant on the black trendline where they had the confluence with the 61.8% Fibonacci retracement level and the daily 21 moving average. If the price were to break lower, the bullish setup would be invalidated, and the sellers will likely increase the bearish bets into the major trendline around the $76 support.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with two key levels now to watch carefully. In fact, on the upside we have the resistance around the $80 level where we can also find the confluence of the downward trendline and the 61.8% Fibonacci retracement level. On the downside, we have the support around the $78 level and the confluence of the upward trendline and the 61.8% Fibonacci retracement level. The buyers will look for a breakout to the upside to increase the bullish bets into new highs, while the sellers will defend the resistance and increase the bearish bets on a break below the $78 support.
Upcoming Events
Today we have the US ADP, the US Job Openings and the Fed Chair Powell speaking. Tomorrow, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US NFP report. Weak data is likely to weigh on Crude Oil, while strong figures should give it a boost.
