The WTI Crude Oil Futures (NYMEX: CL) have embarked on a promising trajectory, initiating the trading session with a robust surge of nearly 50 basis points on Thursday. This bullish momentum finds its roots in a harmonious blend of factors steering market sentiment.
Foremost, OPEC’s optimistic outlook, as outlined in their monthly report, forecasts a formidable 1.85 million barrels per day (bpd) surge in global oil demand by 2025, reaching 106.21 million bpd. Simultaneously, unyielding geopolitical tensions in the Middle East contribute to supply-side concerns, keeping the market buoyant. Furthermore, extreme cold weather in North Dakota, a key U.S. oil-producing state, has led to a steep 650,000 to 700,000 barrel bpd reduction in output, amplifying supply constraints.
However, an unforeseen uptick in U.S. crude oil stockpiles, growing by 0.483 million against anticipated drawdowns, coupled with an underweight economic recovery in China, casts shadows on the oil demand landscape, tempering potential upside gains.
The WTI Crude Oil Futures find themselves trapped in a persistent downtrend, artfully depicted by the price languishing beneath the 100-day moving average on the daily chart.
Amid this descent, a noteworthy interplay of key levels has emerged. Witnessing a resurgence from oversold RSI conditions, the price found solace at $67.71 per barrel (BLL), marking a supportive foundation. However, aspirations for higher grounds faced a formidable obstacle at $76.18 BLL, triggering a retracement as selling pressure eclipsed buying impetus.
Navigating these levels, the price retraced, discovering a formidable stronghold at the 61.80% Fibonacci Retracement Golden Ratio, a level previously tested in January. Amid diminishing volumes and a fluctuation around the 100-day moving average, a symmetrical triangle has materialized, encapsulating the price in a consolidation phase, indicative of indecision. A breakout from this pattern on high volumes could orchestrate a directional move, with the support and resistance levels serving as potential destinations, depending on the direction of the breakout.
In conclusion, the WTI Crude Oil Futures are torn between OPEC’s optimistic demand forecast and supply-side concerns. Technical levels, including the $67.71 and $76.18 per barrel levels, underscore the delicate balance. The impending breakout from the symmetrical triangle holds the key, with support and resistance levels guiding potential market directions.
Sources: OPEC, American Petroleum Institute (API), Reuters, Dow Jones Newswires, TradingView
Piece Written by Nkosilathi Dube, Trive Financial Market Analyst
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