Home Forex Commodities Watchlist: WTI Crude Oil (USOIL)’s Drop to a Key Range Support

Commodities Watchlist: WTI Crude Oil (USOIL)’s Drop to a Key Range Support

by ForexGuy
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Remember that range resistance trade we found a few days ago?

Well, the price of WTI crude oil (USOIL) has fallen and now commodity benchmarks are retesting its support zone.

Speculation about a US Federal Reserve (Fed) rate hike and concerns about global economic growth weighed on risk assets last week, dragging WTI prices from $80.80 to support near $72.00.

WTI crude oil (USOIL) 4-hour chart TradingView

Oil prices didn’t even join the risk party earlier this week! Instead of dumping the dollar in favor of more speculative bets, oil traders are still at risk of bank contagion even after US officials stepped in on Monday. You seem to put a price on fear.

Can the price of WTI keep up with all risk taking?

OPEC left its global growth forecast at +2.6% last month unchanged, but recently raised its 2023 Chinese demand outlook to 710,000 bpd from 590,000 bpd as the country eased its zero-COVID policy.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman also just said the OPEC+ gang will stick to the October production cut deal at least until the end of the year.

Meanwhile, the American Petroleum Institute (API) reported that crude inventories increased by 1.155 million barrels in the week ending March 10, while inventories of crude products such as gasoline and distillates fell.

WTI, which has fallen below the $72.50 range support but is still above the December low of $70.25, could return to a multi-month range if risk appetite picks up in the next trading session. .

The bullish divergence between the Stochastic and WTI 4-hour prices also doesn’t hurt oil buyers in case of bullish momentum.

WTI may return to mid-range resistance at $76.00 before we see sustained selling pressure.

But don’t underestimate downward breakouts.

The US Energy Information Administration (EIA) will release an inventory report later today. Analysts see inventories falling by 200,000 barrels in the week ending March 3 after falling by 1.7 million barrels.

The build-up of much higher stocks could pile on a conservative range breakout and drag WTI price towards the psychological handle of $70.00.

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