WTI Crude Oil Holds $73 as Market Awaits U.S. Data and Supply Concerns Grow
Oil prices edged lower on Tuesday, extending losses for the second session following last week’s rally, which saw prices reach their highest levels since October.
Worries over tightening Russian and Iranian supply due to sanctions have supported prices but haven’t entirely offset bearish global economic sentiment.
Last week’s five-day rally was fueled by expectations of fiscal stimulus in China to boost its weakening economy. However, recent soft economic data from the U.S. and Germany has dampened optimism, suggesting a more cautious outlook. Non-OPEC supply growth and weak Chinese demand further signal a well-supplied market, adding downward pressure on crude prices.
Saudi Arabia’s move to hike February oil prices for Asian buyers, the first increase in three months, reflects stronger demand for Middle Eastern crude, partly influenced by the tightening Russian supply. Additionally, money managers have increased net long U.S. crude positions, suggesting a cautious bullish stance amid ongoing market volatility.
Market Awaits Key Data to Guide Oil’s Path
Traders now await critical U.S. economic data, including December’s nonfarm payrolls report, to assess the Federal Reserve’s interest rate outlook and its implications for oil demand. Any signs of a slower U.S. economy or hawkish monetary policy could weigh further on oil prices.
Despite the recent downturn, analysts at ING noted that tighter physical markets have provided some support. However, they cautioned that comfortable supply fundamentals in 2025 are likely to cap significant upside momentum. The interplay between short-term technical corrections and long-term supply trends will shape crude oil’s trajectory.
Technical Analysis: WTI Crude Oil Holds Ascending Channel
WTI Crude Oil is trading at $73.46, up 0.15% for the day, consolidating within a bullish ascending channel on the 4-hour chart. Immediate resistance lies at $74.36, followed by $75.18 and $76.04. A breakout above $74.36 could pave the way for further gains toward the channel’s upper boundary.
On the downside, support levels are observed at $73.17, $72.40, and $71.39. The 50-day EMA at $72.01 acts as a critical support point, indicating sustained bullish sentiment. The RSI at 58 reflects moderate momentum, leaving room for further gains.
Traders should monitor the $74.36 resistance for potential bullish continuation or watch for a breach below $72.40, which could signal a bearish correction.
