Crude Oil keeps on surging
to new highs as the supply side gets squeezed more amid resilient global
demand. In fact, the OPEC continues to forecast robust growth for oil demand in
2023 and 2024 while keeping supplies tight as we saw last week with the Saudi
Arabia and Russia extending the voluntary supply cuts. Moreover, Libya shut
four of its eastern oil export terminals due to a deadly storm and Kazakhstan
reduced daily oil output for maintenance. As long as the economies remain
resilient, we might continue to see such high oil prices, which could
eventually make the battle against inflation harder.
WTI Crude Oil Technical
Analysis – Daily Timeframe
WTI Crude Oil Daily
On the daily chart, we can see that after the
breakout of the key $83 resistance, Crude
Oil just kept on rallying with almost no pullback. The bullish momentum seems
to be waning as the price approaches the $90 level, so the risk management now
becomes key as the risk of a bigger correction increases. In case of a deeper
pullback, the strongest support would be the broken resistance turned support around
the $83 level where we can also find the trendline.
That’s where we can expect the buyers to pile in
again with a defined risk below the support and
target a new higher high. The sellers, on the other hand, will want to see the
price breaking through the trendline to invalidate the bullish setup and take
the price to the previous lows around the $65 level.
WTI Crude Oil Technical
Analysis – 4 hour Timeframe
WTI Crude Oil 4 hour
On the 4 hour chart, we can see that the price is diverging with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might get a pullback into the minor black trendline
where we can also find the red 21 moving average for confluence. This is
where the buyers are likely to step in with a defined risk below the trendline
and target the $93 resistance. If the price breaks through the trendline, the
sellers are likely to pile in to extend the fall into the $83 support.
WTI Crude Oil
Technical Analysis – 1 hour Timeframe
WTI Crude Oil 1 hour
On the 1 hour chart, we can see more
clearly the short term price action and the support zone around the $88 level.
This level will be key as we will either get a bounce and probably see a rally
into the $93 resistance or a break and a fall into the $85 level first and the
$83 support next.
Upcoming Events
This week we have many important events. Today is the US
CPI Day, which is expected to show an increase in headline inflation due to
higher energy prices but further disinflation in the core measure. Tomorrow, we
will see the latest US Jobless Claims, PPI and Retail Sales data. Finally on
Friday, we get the University of Michigan Consumer Sentiment report. Crude Oil
might react more to growth related data like Jobless Claims and Retail Sales.
In fact, if we get very bad readings, we should see a selloff in Crude Oil
given the stretched levels, but if the data remains solid, then the bulls will
still be in charge.
See also the video below