WTI Enters Fourth Day of Declines on Demand Concerns in demand worries, according to the oil price forecast as economic activity is uncertain
WTI Crude oil tries to close the OPEC-inspired spread as the 50 SMA approaches
Looking at the continual futures chart (CL1!) after recording the monthly high of about $83.53 last week. WTI oil is still declining to the current strength of the currency. And worries about global demand affecting the price of the energy product.
Due to a number of sticky March readings that required an increase in rate expectations. The banking sector’s calmness has allowed major central banks to turn their emphasis back to bringing core inflation down.
Fears about global expansion ahead of next week’s publication of the US GDP figures for the first Q1 are increased by stricter credit and economic conditions. These were both mentioned in the Fed’s Beige Book report Wednesday.
Over the preceding four days, it seems as though a mix of increasingly tighter financial circumstances, which have raised fears about demand worldwide, and a little increase in the dollar has reduced oil prices.
Following a weekly reduction in US crude oil supplies during the week concluding April 14 as seen, oil prices continued to decline:
Technical analysis of WTI: Gap repair is being worked on
WTI currently tries to close the price gap left by OPEC’s unexpected output reduction at the end of April. Which is estimated to have removed 1.16 million barrels per day (mbd) of production. After temporarily breaching the zone of resistance and retracing at the 200 simple moving average (SMA). For a breakdown of the reduction per OPEC member country, see the graph below:
Source: Reuters
The 50 SMA can be seen not far from the long-term point of significance at $77.40, which provides immediate support. A further decrease to $75.75 would achieve that after oil prices have tried to close the gap.
There is potential for a negative continuance since the output cutbacks are only anticipated to take effect from the start of May. But given how tight the oil market is getting, price reductions aren’t anticipated to last in the long run. Back at the incredibly significant $82.50 region and the 200 SMA, resistance is seen.
