The WTI futures (NYMEX: CL) kicked off the new week on a balanced note, looking to extend its streak of five consecutive days on the rise. Last week’s momentum saw the futures surge by over 6% following the Israeli Prime Minister’s dismissal of a ceasefire proposal from Hamas, amplifying concerns over supply amidst ongoing geopolitical tensions in the Middle East.
However, recent statements from the Israeli military indicate a conclusion to strikes on Gaza, easing fears of supply disruptions, albeit casting a bearish shadow on the oil market. Looking ahead, Tuesday’s release of US inflation data could steer price movements, especially if the dollar undergoes significant shifts, while anticipation mounts for insights into the current supply-demand landscape from OPEC’s monthly oil report.
Technical
On the 4H chart, an uptrend has formed, retracing a large portion of the prior downtrend. The crossing of the 25-SMA (green line) above the 50-SMA (blue line) indicates a bullish shift in the shorter-term momentum. Still, the RSI signals potential overbought conditions, which could catalyse a technical pullback.
The prior 61.8% Fibonacci golden ratio is currently undergoing a retest at $76.29/barrel (BLL), which is at the dynamic support of the uptrend. If this support fails to withhold the selling pressure, a breakdown could occur toward $75.36/BLL, the Fibonacci midpoint. This could be a pivot point in the direction of the futures, as an additional leg down could confirm a trend reversal, potentially bringing the price closer to the $74.20/BLL mark, which falls below the multiple SMAs. However, a pivot off $75.36/BLL could retest the sustainability of the breakdown, leaving the door open for a bullish correction.
If the price remains above the $76.29/BLL level of the uptrend, the momentum could continue. Resistance at $77.33/BLL could be the first hurdle to a sustainable run, where clearance could open a path toward $78.12/BLL. If the momentum is sustained past this level, the futures could retest the high of the prior upswing at $79.31/BLL to test whether it has the strength to clear this psychological level.
Summary
After last week’s surge, the WTI futures remained subdued in the opening hours of Monday’s trade. The US inflation data and ongoing developments in the Middle East could drive the price action in the upcoming week, with support at $76.29/BLL acting as a pivotal level in the uptrend’s momentum.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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