WTI CRUDE OIL - Crude oil price review for the week ahead - 05/13/2024 (GMT)

Oil prices fell due to weak fuel demand and concerns over U.S. interest rate cuts staying unchanged for the majority of the year, impacting the world's biggest economy. Global economic outlook and sluggish business demand in China, after the publication of the producers price index last week, contributed to the decline in oil prices. Expectations of extended supply cuts by OPEC+ and the reduction in U.S. oil rig count which dropped to 496 reaching the lowest level since November indicating reduced drilling activity which directly affects supply also contributed in the changes of oil price. In addition the failure to reach a ceasefire agreement in the Middle East keeps volatility in the oil market high resulting in sharp movements on the daily chart.

  On the technical side, the price has found sufficient support on the 61.8% of the daily Fibonacci retracement level and is currently holding the $78 price area which is also an area of price reaction since mid March. The Bollinger bands are still quite expanded showing that volatility is still high in the market for crude oil while the faster moving averages of 20 and 50-days are trading above the slower 100-day moving average validating the overall bullish momentum. The Stochastic oscillator is in the extreme oversold level hinting that there might be more room for a continued move to the upside in the coming sessions. If this scenario is confirmed then the first area of possible resistance might be seen around the $80 level which is the psychological resistance of the round number as well as the area just above the 50% of the daily Fibonacci retracement level.