Crude Oil Forecast: Analysis Update

• Crude Oil is challenging the 82-resistance level
• Latest Crude Oil inventories were trending downwards
• U.S Final GDP and Core PCE data are next on the calendar

With a busy week of FOMC member speeches, market attention is focused on the upcoming PCE data release on Friday. For oil, the data from the Fed’s favored inflation gauge is expected to influence expectations regarding demand potential.

Monetary policies on one hand and the GDP of the U.S. economy on the other create a critical balance under the spotlight, as the risks of a recession loom with declining economic growth. Similarly, oil bulls are awaiting signs of an improved growth outlook and easing inflationary pressures to set a more favorable projection for their trend.

Crude Oil Forecast: USOIL – 3D Time frame – Logarithmic Scale

Since May 2023, the oil trend has been narrowing, potentially forming a five-legged triangle pattern. A similar pattern can be observed in its Relative Strength Index (RSI) indicator.

Oil scenario:

Short-Term Perspective:

A potential drop might hold at the border of the trend supporting this year’s initial lows, between 78.30 and 79.30, before reversing back up towards:

1. 82-resistance level: the upper border of its expanding pattern

2. 85-resistance level: the upper border of its contracting pattern

Breaking out above the triangle pattern, the 92 level could be the next potential resistance after 85.

Bearish Scenario:

If the price falls back below the 78 zone, a bearish track might develop as follows:

1. A drop towards the lower end of the triangle, near the recent low of 72.90, can be expected.

2. A further drop below this border could proceed towards the December 2023 lows near the 68 zone.

With the oil trend hovering just below the upper border of its shorter-term expanding pattern, key levels are watched to guide the next trend.

--- Written by Razan Hilal, CMT