Price, charts, and analysis for WTI:
WTI Price Action Is Bearish and Heading Towards Losses for a Second Week.
FUNDAMENTAL OUTLOOK FOR WTI
Despite widespread US Dollar depreciation for the bulk of the week, crude oil has had a challenging week. WTI struck a new three-week low yesterday and continues to trend downward as the threat of penalties against Russian oil goods looms.
The drop in oil prices this week might be ascribed to a wide range of variables. The US’s oil reserves increased to its greatest level since June 2021, and the Energy Information Administration also reported a rise in the stockpiles of goods derived from oil. The change in EIA oil stockpiles for the week ending January 28 increased by 4.14M vs the predicted 0.376M.
Despite continued optimism over demand, stockpiles are still rising as China continues its reopening. This week’s data from China were mixed, with the Caixin Manufacturing PMI missing forecasts and coming in at 49.2, which is still in contractionary zone, while the NBS Manufacturing PMI came in over the 50-point level. Looking ahead, we still need to see further progress in the Chinese statistics and an increase in real demand, which might provide oil prices additional support.
The JMMC recommended that output hold stable at the OPEC+ meeting this week since Chinese demand has not yet materialized.
The dollar fell during this week’s FOMC meeting as the Fed indicated progress by using the phrase “disinflation,” which appeared to bolster risk assets. As investors rush back into equities following the collapse of 2022, many companies and indexes are currently selling at discounts, which has likely helped to the decrease in oil prices.
We will receive a number of important US data points later today, including the NFP report, which is expected to have a significant influence. Average hourly wages are particularly important in the fight against inflation.
TECHNICAL PERSPECTIVE
Technically speaking, WTI is headed for a second consecutive week of declines. Price movement on the daily timeframe has turned bearish when a daily candle closed below the last lower swing high, which was at the $79 per barrel level. Since then, the price has found some support, now trading above the $75 per barrel handle. A closing below the $73 level might lead to a retest of the 2022 bottom around the $70 handle. This is a key support region.
In contrast, resistance for a rise in WTI comes from the 50-day MA, which is at $77.50, and the 100-day MA, which is at the $81.45 level.