WTI Crude Oil Forecast: Price Rebound Signals Potential Breakout Above $75 Resistance
Oil prices managed to firm up on Friday, yet they remain on track to close the week lower. Concerns over weaker U.S. employment data have cast doubts on the health of the world’s largest oil consumer, while ongoing ceasefire discussions in Gaza have helped alleviate supply disruption fears.
Both West Texas Intermediate (WTI) and Brent crude hit their lowest levels since January earlier this week, driven by a significant downward revision in U.S. job growth figures.
The U.S. government’s recent reduction in its estimate of jobs added through March has sparked recession fears, leading to concerns that demand for oil in the United States could weaken. However, some experts believe that the market may be overreacting to this revision. According to John Evans, an analyst at PVM Oil, “The concern over a potential U.S. recession affecting oil demand may be exaggerated, but it has certainly contributed to this week’s price movements.”
#WTI (CRUDEOIL) Analysis
Crude Oil is currently trading around $73.15. If it sustains above $73.50, it could test levels of $74, $74.50, and $75.
On the other hand, if it drops below $72.80, it might retest $72.50, $72, and $71.
JOIN US NOW https://t.co/AQUtsr4ggu#CrudeOil… pic.twitter.com/iAsrIvjwoW
— Jessica Symonds (@JessicaSymonds8) August 23, 2024
Market Focus Shifts to Fed Chair Powell’s Speech
Investors are now turning their attention to Federal Reserve Chair Jerome Powell’s highly anticipated speech, scheduled for 14:00 GMT on Friday. The market is widely expecting an interest rate cut as early as next month, a move that could influence oil prices. “A quarter-point cut in September is already priced in by the market and is likely to receive a lukewarm response,” Evans noted. However, he added that “a more aggressive half-point cut would signal a significant shift away from the Fed’s current tightening stance.”
Morgan Stanley also weighed in, stating that a reduction in oil inventories has provided some support for prices. “The oil market remains tight, with inventories drawing down approximately 1.2 million barrels per day over the last four weeks, and we expect this trend to continue through the third quarter,” the bank mentioned in a note.
Impact of China’s Economic Slowdown on Oil Prices
Adding to the complexity of the situation, recent data from China, the world’s top oil importer, indicates a slowing economy and reduced oil demand from refiners. This has further weighed on oil prices, as China’s economic performance is a significant driver of global oil demand. Additionally, renewed efforts for a ceasefire between Israel and Hamas have eased concerns about potential supply disruptions in the Middle East, contributing to the downward pressure on prices.
🌍 Global Oil Demand Under Pressure China’s struggling economy and U.S. job data revisions weigh heavily on oil demand, dragging prices down further this week. #ChinaEconomy #OilDemand #MarketUpdate #POWELL #TRUMP pic.twitter.com/Oa9Wj1wf94
— Sifra Al (@SifraAl7847) August 23, 2024
WTI Crude Oil Price Forecast
WTI Crude Oil has recently broken out above its downward trendline and is now trading around the $72.93 level, signaling a potential shift in momentum. Immediate resistance is found at $74.38, which aligns with the 50-day Exponential Moving Average (EMA). Should prices maintain above this level, the next target is $75.76, a critical resistance zone. On the downside, support is expected around $72.93, with additional levels at $71.49 and $70.26.
The Relative Strength Index (RSI) currently sits at 53.61, indicating neutral to slightly bullish momentum. A break above the 50-day EMA at $74.38 would further solidify the bullish outlook.
Conclusion: Keep an eye on the $74.38 resistance level. A break above could signal a continuation of the upward trend, with $75.76 as the next target. However, if the price falls below $72.93, further declines may be on the horizon.
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