Weekly Outlook- Crude Oil

“Oil Prices Slide Sharply This Week Amid Global Economic Jitters”

Oil prices saw a modest increase on Friday, though they are poised to record their most substantial weekly decline in three months. This dip is attributed to lingering concerns surrounding demand and elevated interest rates, which have fueled a sell-off. However, this decline was somewhat offset by expectations that OPEC+ will continue to restrain production.

The current week has been marked by apprehension among investors, who fear that sustained high interest rates could dampen economic expansion in the United States—the world's foremost oil consumer—and elsewhere around the globe.

The U.S. Federal Reserve recently opted to maintain interest rates at their present levels and acknowledged the persistence of elevated inflation rates, which may defer any potential rate adjustments. Later today, the U.S. Bureau of Labor Statistics is scheduled to publish its monthly report on nonfarm payrolls—a key indicator of the nation's labor market health that the Federal Reserve considers when contemplating interest rate adjustments.

Crude oil prices retreated from the upper boundary of a Symmetrical Triangle pattern on the weekly chart and dropped below the lowest point of the past seven weeks that indicates a bearish bias. Moreover, on the daily chart, the price fell below the 100-day Exponential Moving Average (EMA) and breached a previous swing low around the 6750 level. These technical developments suggest weakness in the market.

The Relative Strength Index (RSI) on the daily timeframe showed a negative crossover, further confirming the bearish momentum. Hence, traders are advised to adopt a negative bias and consider implementing "buy on dips" strategies in the short term.
Meanwhile, it's crucial to monitor global events and U.S. stockpile data for insights into the oil market's significant trends. Technically, potential support levels to watch are around 6400/6250, while resistance levels are at approximately 6800 and 7050.

Overall, the technical chart suggests a bearish outlook for crude oil prices, with caution advised for traders considering short-term positions. Also, keeps an eye on key support and resistance levels, as well as external market factors influencing oil prices.
 

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