WTI Oil Developments and Analysis:
Challenges Arise in Fossil Fuel Phase-Out Discussions. Navigating the complex topic of phasing out fossil fuels proves to be a formidable challenge, as WTI prices loom in a precarious state, threatening to extend a bearish trend following a brief consolidation period.
Market sentiment surrounding WTI indicates a potential continuation of selling pressure, with traders heavily positioned on the sell side. This analysis delves into chart patterns and identifies key support and resistance levels to provide insights into the market dynamics.
Phasing Out Fossil Fuels Proves a Stumbling Block
The COP28 climate summit witnessed an extension into the early hours of Tuesday, reflecting the ongoing struggle among participating nations to reach a consensus on a global plan of action for timely climate change mitigation.
A draft text released on Monday triggered extensive debates, leading to overtime discussions. Initial guidance focused on identifying potential stumbling blocks and 'deal breakers,' particularly concerning the phasing out of fossil fuels.
However, a general agreement on this crucial matter is yet to be reached, emphasizing the need for consensus. Market Reaction to US CPI and Dollar Dynamics Tuesday also marked the release of the US Consumer Price Index (CPI), with the data showing CPI printing in line with estimates for both headline and core measures. However, month-on-month inflation surprised slightly to the upside. The dollar experienced a partial recovery in the aftermath, although the short-term impact of the monthly print is unlikely to overshadow the longer-term trend of declining inflation. The upcoming FOMC meeting on Wednesday is anticipated to provide further insights into market movements and potential shifts in monetary policy.
Oil Prices on the Verge of Extending Bearish Trend Following Brief Consolidation
The persistent bearish trend in oil prices remains evident, as the commodity continues to trade well below the 200-day simple moving average (SMA). Concerns are mounting as the morning star pattern, formed since last Wednesday, faces the risk of invalidation. The current test of the pattern's low is accompanied by the Relative Strength Index (RSI) rapidly approaching oversold conditions once again.
A strong support level stands at $67, aligning with the previous underside of the price range identified by the Biden administration to replenish depleted Strategic Petroleum Reserve (SPR) storage. This level also corresponds to the price just before Saudi Arabia implemented its voluntary supply cuts. On the upside, resistance is observed at $72.50, followed by $77.40.
Looking ahead, the Federal Open Market Committee (FOMC) meeting emerges as the next major event, and market participants eagerly await insights into the Fed's growth projections. The ongoing global growth slowdown continues to exert downward pressure on oil prices, with WTI facing the prospect of further selling if there is confirmation of a deceleration in growth. The daily chart for WTI Oil reflects the current market dynamics, highlighting the critical levels and patterns influencing the commodity's price movements.
Source: TradingView
IG Client Sentiment Signals Bearish Continuation with Traders Maintaining Significant Long Positions
Source: TradingView
Oil - US Crude: Retail trader data reveals that a significant 86.55% of traders have positioned themselves as net-long, resulting in a long-to-short ratio of 6.44 to 1.
In our analysis, we often adopt a contrarian perspective towards crowd sentiment. The prevailing net-long stance among traders suggests a potential continuation of the downward trend in Oil - US Crude prices.
It's noteworthy that traders are even more net-long compared to both yesterday and the previous week. Considering the current sentiment and recent shifts, our contrarian trading bias leans towards a stronger bearish outlook for Oil - US Crude.
For further insights, you can connect with us on Twitter: @7R4G
Comments
Post a Comment