WTI Price Forecast: Consolidates around $64.00; technical setup favors bulls
- WTI edges lower during the Asian session on Wednesday, though it lacks follow-through selling.
- Concerns about supply disruptions from Russia continue to act as a tailwind for the black liquid.
- A breakout through a short-term ascending channel backs the case for the emergence of dip-buying.
West Texas Intermediate (WTI) US Crude Oil prices struggle to capitalize on strong recovery gains registered over the past three days and tick lower during the Asian session on Wednesday. The commodity, however, defends the $64.00 mark amid concerns over Russian supply disruptions.
From a technical perspective, the overnight breakout through a short-term ascending trend-channel, extending from a multi-month low touched earlier this month, was seen as a key trigger for bulls. Moreover, positive oscillators on hourly/daily charts suggest that the path of least resistance for Crude Oil prices is to the upside and backs the case for the emergence of some dip-buying at lower levels.
That said, weakness below the $64.00 mark, also representing the ascending channel resistance breakpoint, might prompt some technical selling and drag the commodity to the next relevant support near the $63.50-$63.45 area. The subsequent fall would suggest that the recovery move has run out of steam and make Crude Oil prices vulnerable to accelerate the slide towards testing sub-$63.00 levels.
The declining trend could extend further towards the $62.20 intermediate support before the black liquid eventually weakens below the $62.00 mark, towards testing the lower boundary of the aforementioned channel, currently pegged near the $61.80-$61.75 region.
On the flip side, the $64.40 region, or a two-week high touched on Tuesday, could offer an immediate hurdle, above which Crude Oil prices could aim to reclaim the $65.00 psychological mark. Some follow-through buying would set the stage for further gains towards the $65.50-$65.60 barrier, which, if cleared, would reaffirm the constructive setup and trigger a fresh bout of short-covering.
WTI 4-hour chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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