Remember that range resistance trade that we spotted a few days back?
Well, WTI crude oil (USOIL) prices have gone down and now the commodity benchmark is re-testing its support zone!
See, Fed rate hike speculations and global growth concerns weighed on risk assets last week and helped drag WTI prices from its $80.80 levels all the way to the range support near $72.00.
WTI Crude Oil (USOIL) 4-hour Chart by TradingView
Crude oil prices didn’t even join the risk party earlier this week! Instead of dumping the dollar in favor of more speculative bets, it looks like oil traders still priced in their banking contagion fears even after U.S. authorities have stepped in on Monday.
Can WTI prices catch up to all the risk-taking?
While it kept last month’s global growth forecasts unchanged at +2.6%, OPEC recently raised its China demand outlook 590,000 bpd to 710,000 bpd in 2023 as the country relaxed its zero-COVID policies.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman also just shared that the OPEC+ gang will stick to its October production cuts agreement until at least the end of the year.
Meanwhile, a report from the American Petroleum Institute (API) showed crude oil inventories rising by 1.155 million barrels in the week ending March 10 though crude oil products like gasoline and distillates showed lower inventories.
WTI, which has fallen below the $72.50 range support but is still above the $70.25 December lows, can return back to its months-long range if risk appetite picks up in the next trading sessions.
A bullish divergence between Stochastic and WTI’s 4-hour prices also wouldn’t hurt oil buyers in case of a bullish momentum.
WTI could pop back up to the $76.00 mid-range resistance before seeing sustained selling pressure.
Don’t discount a downside breakout though!
The U.S. Energy Information Administration (EIA) will publish its inventories report later today. Analysts see inventories falling by 0.2 million barrels after a 1.7 million-barrel decrease in the week ending March 3.
A much higher inventory build could pile on to the lowkey range breakout and drag WTI prices to the $70.00 psychological handle.
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