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WTI Crude Oil on Track for $50

By FxPro Financial Services Ltd (Alexander Kuptsikevich)CommoditiesNov 28, 2022 09:58AM ET
www.investing.com/analysis/wti-crude-oil-on-track-for-50-200632856
WTI Crude Oil on Track for $50
By FxPro Financial Services Ltd (Alexander Kuptsikevich)   |  Nov 28, 2022 09:58AM ET
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Oil is losing over 3% on Monday due to concerns about demand in China caused by strengthening lockdowns. Also, demand for risky assets, including oil, declined due to massive protests in China against the zero-covid policy.

In addition, the news that the US has granted Chevron (NYSE:CVX) a license to produce oil in Venezuela should not be missed either.

The price of WTI dipped below $74 on Monday
The price of WTI dipped below $74 on Monday

The price of WTI dipped below $74 on Monday, while Brent was temporarily trading below $81, hitting its lowest level in 11 months. Oil is very sensitive to fluctuations in global supply and demand, so even news of a potential supply and demand shift was enough to intensify the sell-off.

Today's move down confirmed the severity of the downward momentum of the last three weeks, as prices broke the support that stood two months ago. On the technical analysis side, the two upside impulses above $93 for WTI were nothing more than a corrective pullback as part of the downside trend from June this year.

Looking solely at the chart, the price could pull back quite quickly by another $10 to $64, where it last received support from buyers in August and December 2021. The realization of the Fibonacci pattern suggests a drop to $49 (161.8% of the initial decline).

Brent was temporarily trading below $81, hitting its lowest level in 11 months
Brent was temporarily trading below $81, hitting its lowest level in 11 months

However, in oil, such long-term patterns are permanently disrupted by geopolitics. And now traders should also keep in mind that oil bounces in recent months have been directed by OPEC+, which first hinted at and then announced production quota cuts.

It is also worth realizing that the energy situation in Europe looks better than expected only because of warmer weather. This factor remains outside the influence of the authorities, and in case of colder weather, energy prices could go up sharply, despite economic weakness.

Geopolitics and weather are the most significant risks to an overall bearish scenario in oil, which sees the price falling another $10 before year-end to $64 and $25 to $49 before the end of the second quarter next year. Translated into Brent, the scenario assumes a drop to $71 and $57, respectively.

WTI Crude Oil on Track for $50
 

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WTI Crude Oil on Track for $50

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Comments (9)
takis symeon
takis symeon Nov 30, 2022 6:17AM ET
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stupidity making people loosing their money by scaring them. better find another job
Shadat Hossen
Shadat Hossen Nov 29, 2022 3:36PM ET
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Where do these fake, stupid analysts come from!!
wajid pathan
wajid pathan Nov 29, 2022 5:19AM ET
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Midnight Trader
Midnight Trader Nov 29, 2022 12:41AM ET
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Well that didn’t work out too well😟
Freddyboy Fred
Freddyboy Fred Nov 29, 2022 12:00AM ET
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lol good joke
Jonas Kvistfors
Jonas Kvistfors Nov 28, 2022 2:06PM ET
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haha.. that's a technical analysis for you with NO fundamental considerations... good luck with that... picking up pennies in front of a steamroller as someone described oil shorts
AkAA KAAA
AkAA KAAA Nov 28, 2022 12:32PM ET
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👍👍👍👍👍👍👍👍👍
Shadat Hossen
Shadat Hossen Nov 28, 2022 11:04AM ET
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👎👎👎👎👎👎👎
Eric Schorvitz
Eric Schorvitz Nov 28, 2022 11:03AM ET
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As soon as China lockdowns end oil will run. To say we will see $50/barrel WTI is nonsense.
 
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