WTI Crude Oil prices (NYMEX: CL) are attempting to rebound after a four-day decline, buoyed by speculation that the US government might replenish its Strategic Petroleum Reserve (SPR) at around $79 per barrel. This potential buying pressure comes after a larger-than-expected build in US crude inventories and fading hopes for a swift ceasefire between Israel and Hamas, which had initially weighed on prices.
However, the overall sentiment remains cautious. The Federal Reserve’s decision to maintain interest rates, coupled with concerns about slowing economic growth and potentially higher-for-longer rates, is capping demand expectations. The upcoming non-farm Payrolls data will be closely watched, as a weak report could further dampen the bullish narrative.
Technical Analysis
The technical picture for WTI Crude Oil presents a mixed outlook. The price currently trades below all its major SMAs [20 (green line), 50 (blue line), and 100 (orange line)], indicating a prevailing bearish trend. This bearishness is further emphasized by the RSI hovering below the neutral 50 level at 35.10.
However, there are signs of a potential reversal. The recent price action suggests a possible short-term bottom formation around the $78.82/BLL level. A break above the $80.89/BLL price level, on significant volume, could trigger a further push higher, with the $82.33/BLL and $84.49/BLL acting as the next levels of interest above the SMAs.
However, with the RSI firmly below the 50.00 level, a sustained push lower could find significant support at the last swing low of $78.82/BLL. A break below the initial support, at significant volume, could confirm the bearish momentum, likely bringing the $76.79/BLL price into play.
Summary
WTI crude oil prices are holding steady amidst a complex mix of fundamental and technical factors. Downside pressure comes from weak demand concerns and upside potential from possible US intervention and OPEC+ production cuts. The technical picture is neutral, with a potential breakout looming in either direction. A break above $80.89/BLL or below $78.82/BLL will be crucial in determining the next leg of the move for WTI Crude Oil prices.
Sources: TradingView, Trading Economics, Reuters, CNBC, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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