Since it spiked near $95 in late September, the price of crude oil has been falling. But this month, the decline accelerated and the price slipped below $80 since it didn’t seem like tensions in the Middle East were spreading further in the region which would have hampered production. WTI Oil has lost all of its gains from the Israel-Hamas war, which suggests that, barring more escalation with Iran, the market has calmed down and is looking at the economic data now.
The EIA crude Oil inventories didn’t help much either last week. According to figures issued by the Energy Information Agency, Oil stockpiles increased by 3.6 million barrels in the previous week, while output remained stable at a record 13.2 million barrels per day. On the other hand, the Federal Reserve showed that the United Auto Workers’ strike had an impact on motor vehicle output in October, causing a 0.6% decline in U.S. industrial production. The declining demand theory is supported by increasing supply despite Saudi Arabia’s pledge to keep Oil output cuts in place, and slower industrial production.
US WTI Oil H4 Chart – MAs Acting As Resistance
The stochastic indicator is getting overbought
So, the decline continued, with the WTI crude breaking through the $80 major support zone and then continuing below the $75 level. The price eventually slipped to lows of $72 early last week, but by the end of the week, things were looking up as crude Oil prices reversed, with WTI reaching $79.80 but falling short of the $80 mark.
On the daily chart, the price created a doji candlestick, which is a bearish reversing indicator, and the price continued down on Wednesday and Thursday, but the decline stopped and on Friday we saw a strong reversal higher, sending WTI nearly $4 higher, closing the week above $75. However, we are following the price action and will try to open a long-term sell Oil signal at the 50 SMA (yellow).