WTI Price Forecast: Struggles below $61.00, seems vulnerable to slide further
WTI drifts lower for the second consecutive day on Friday amid easing geopolitical tensions.
Concerns that the US government shutdown will dent demand also weigh on the commodity.
The technical setup favors bears and backs the case for a further near-term depreciating move.
West Texas Intermediate (WTI) US Crude Oil prices extend the previous day's pullback from the vicinity of mid-$62.00s, or the weekly top, and remain depressed for the second straight day on Friday. The commodity sticks to modest intraday losses below the $61.00 mark through the Asian session and remains close to the weekly low touched on Tuesday.
US President Donald Trump said Wednesday that Israel and Hamas had agreed on the first phase of his 20-point Gaza peace plan after talks in Egypt, easing market concerns about the risk of oil supply disruptions from the Middle East. This comes on top of worries that a prolonged US government shutdown could dampen the economy and hurt oil demand in the world’s largest crude consumer, which, in turn, is seen exerting pressure on Crude Oil prices.
From a technical perspective, this week's repeated failures near the 200-period Exponential Moving Average (SMA) on the 4-hour chart favor bearish traders. This, along with negative oscillators on 4-hour and daily charts, suggests that the path of least resistance for Crude Oil prices is to the downside. Hence, some follow-through weakness towards the $60.25-$60.20 region, or the lowest level since May, touched earlier this month, looks like a distinct possibility.
This is closely followed by the $60.00 psychological mark, which, if broken decisively, will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. Crude Oil prices might then accelerate the fall towards testing May swing low, around the $59.40 region, before eventually dropping to the $59.00 round figure.
On the flip side, any meaningful recovery attempt is likely to face stiff resistance near the $61.55-$61.60 region, above which Crude Oil prices could aim to reclaim the $62.00 round figure. Bulls, however, need to wait for a sustained breakout through the 200-period EMA on the 4-hour chart, currently pegged near the $62.35 zone, before positioning for further gains towards the $63.00 mark and the next relevant hurdle near the $63.70-$63.75 area.
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