Is the trend still our friend on WTI crude oil?
The commodity price is retreating from its channel top and looks ready for a pullback.
Better keep tabs on these correction levels on the hourly chart!
WTI Crude Oil (USOIL) 1-hour Forex Chart by TradingView
Volatility picked up for this commodity in the past trading sessions, as EIA crude oil inventories showed a larger build while rumors swirled that the OPEC is considering more production cuts.
Stockpiles rose by 4.2 million barrels, outpacing the consensus of a 3.1 million barrel build but still lower than the API’s 8.4 million barrel jump in private inventories.
While this might still be indicative of slowing oil consumption, losses were kept in check by reports that the oil cartel is planning on extending its output deal for a few more months. Recall that the OPEC agreed in November to slash output by 2.2 million barrels per day until Q1 2024.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on crude oil, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Crude oil is still cruising inside its ascending trend channel visible on the hourly chart, with price retreating from resistance and testing the 38.2% Fibonacci retracement level at R1 ($79.17 per barrel).
A larger correction could reach the 50% Fib that coincides with the dynamic support at the moving averages or the 61.8% level that lines up with the pivot point level ($77.22 per barrel).
If any of these hold as support, the commodity price could resume its climb to the swing high at $79.60 per barrel, just slightly below R2 ($79.79 per barrel). The line in the sand for a bullish pullback might be the channel bottom that’s right in line with the $77 per barrel major psychological mark.
A break below this might set off a reversal from the short-term uptrend, possibly dragging crude oil down to S1 ($75.63 per barrel) next.
Stochastic already seems to be pointing at a continuation of the climb, although the oscillator still has some room to head down before indicating oversold conditions.
The U.S. core PCE price index might be worth keeping tabs on later today, as the Fed’s preferred inflation measure might have a strong impact on the central bank’s policy expectations. So far this week, U.S. data has been falling short of estimates, so another miss might be enough revive talk of earlier rate cuts.
Do you think crude oil could resume its rally soon?