Crude Oil futures have managed to maintain a position of $73.386 per barrel yesterday despite significant pressure that led to a decline in the black gold to 71.360, which marked a fresh low since January 18 of this year.
Overview
Crude Oil futures have managed to maintain a position of $73.386 per barrel yesterday despite significant pressure that led to a decline in the black gold to 71.360, which marked a fresh low since January 18 of this year.
Technical Analysis
Crude Oil has been following a downward path since January 28, after reaching a peak price of 79.184, driven by geopolitical uncertainties. The development of a technical reversal pattern, known as Evening Star, to the downside on January 29 intensified the commodity's inclination toward lower price levels. In particular, the breach of the key support level at 75.970 resulted in further downward momentum, with prices dropping below the 50-period Moving Average, signaling a bearish outlook shift.
Potential Downside Targets
Should the bearish momentum continue to dominate the market, there are two potential downside targets that traders may consider:
71.360: The initial target represents a retest of the recent low price established during the current downward move, marked at 71.360 on February 5.
69.618: Applying the Pivot Point Standard method on the weekly timeframe, it is possible to calculate a potential support level at 69.618. Given the bearish market conditions, this serves as an additional point for consideration.
Conversely, should the bulls manage to take control of the market, two additional price targets may be estimated:
74.401: Should the market follow an upward trajectory, a potential resistance target is identified at the 74.401 level, corresponding to the weekly Pivot Point using the Standard method.
77.075: An additional upward objective may be calculated using the weekly Pivot Point method.
Fundamentals
The Crude Oil Stocks Change Indicator, released by the Energy Information Administration (EIA) on January 31, revealed an inventory increase of 1.2 million barrels from the previous week, exceeding the forecasted expectations of a decrease in crude reserves by 800000 barrels, which fueled concerns for weaker demand for Oil with a negative impact on the oil price.
The next announcement of the Crude Oil Inventories is set for today at 15:30 GMT.
On another note, last week, the Federal Reserve hinted that the interest rates may have reached their peak but indicated that rate cuts are unlikely to be implemented in March. Usually, a decline in interest rates fosters economic growth, contributing to a rise in the demand for Oil.
Conclusion and Considerations
In conclusion, the crude oil market is looking for a direction amid today's release of the Crude Oil Stocks Change Indicator and global geopolitical events.