Crude Oil Analysis and Charts

• Crude Oil Prices are sliding once again.
• Traders remain worried about demand if inflation proves resilient and interest rates stay up.
• Still the broad price uptrend is not yet under serious threat.

Crude oil prices wilted again on Wednesday as worries about final demand levels trumped concerns about conflict in the Middle East and its effects on supply.

Those worries are certainly well founded. Western economies are likely stuck with ‘higher for longer’ interest rates, with inflation slow to die even as recession haunts many of them. China’s brand of economic malaise also seems deep-rooted even as Beijing battles to stimulate some growth Indeed, the largest cut to benchmark mortgage rates in that country’s history failed to lift oil prices this week, suggesting few in the energy markets believe President Xi Jinping has any quick fixes at his disposal.

The International Energy Agency set the broad tone last week when it revised its 2024 oil-demand growth forecast lower. It’s now looking for a million fewer Barrels Per Day than the Organization of Petroleum Exporting Countries, tipping growth of 1.2 million BPD to OPEC’s 2.25 million.

Still, the market remains underpinned by news flow from Ukraine and Gaza. The knock-on effects of the latter war in the Persian Gulf and the Red Sea, where Yemeni militants continue to disrupt shipping are all too clear.

The Energy Information Agency’s snapshot of US stockpiles is coming up on Thursday. It will attract a lot of focus after the previous week’s big crude inventory build, which isn’t expected to be repeated.

US Crude Oil Prices Technical Analysis

The US West Texas Intermediate crude benchmark remains well within the broad uptrend established in mid-September. That looks safe enough for now as it would take a failure of channel-base support at $74.24 to threaten it and that’s a long way below the current market.

Major support closer to hand comes in at the retracement prop of $76.79 and that is in more jeopardy. Keep an eye on this on a daily and weekly closing basis as a durable slide below it might put further weakness on the cards.

There’s resistance at Tuesday’s top of $78.45 ahead of Jan 29’s one-month peak of $79.25. If the bulls can get above that and stay there, they’ll eye the trading band from October 2023 between $80.40 and $83.67 as the next barrier to progress. Still the current cautious market might well see sellers emerge at the psychological $80 handle, should it come up.

--By David Cottle For DailyFX

https://www.dailyfx.com/news/crude-oil-heavy-as-global-demand-worries-win-out-over-geopolitics-20240221-20240222.html