Crude oil has been affected by various negative supply and demand factors. OPEC+ announced plans to increase production starting in April, coinciding with concerns over demand due to weak US data and declining stock markets.
Prices have fallen back to September 2024 lows, with a downward trendline indicating bearish momentum. Sellers are likely to target a break below the key 63 support zone, while buyers aim for a price increase towards the 80.00 mark.
Strong Resistance Zone
A strong resistance zone exists around the 68.00 handle, where sellers may try to push prices lower. The average daily range is indicated on the 1-hour chart, with focus on potential price movements.
The week ends with the release of the US University of Michigan Consumer Sentiment report.
This decline in crude markets has created an unfavourable backdrop for those with long positions. The combination of surplus fears and lower-than-expected economic performance in the United States has reinforced a cautious attitude. With production set to rise, any additional weakness in demand could leave prices under continued pressure.
The recent move lower saw prices slip to levels last observed nearly a year ago, marking a developing trend that has been hard to ignore. The 63 support area now stands as the key level that has contained downward movements thus far. If that floor gives way, technical traders may start considering additional downside targets. Sellers have shown willingness to take control near resistance, with the 68 level acting as a barrier that has rejected upward movement.
Broader Market Perspective
From a broader perspective, attitudes remain hesitant. Buyers, while still active at lower levels, have found it difficult to generate sustained rallies. The 80 region is a psychological barrier, but given the current structure, reaching such levels would require a shift in sentiment or external catalysts. Until then, the focus stays on short-term fluctuations within the established range.
Looking ahead, scheduled data releases will provide more clarity. Consumer confidence figures from the University of Michigan will offer insights into spending behaviour, a component that could impact energy demand. A deterioration in sentiment could reinforce existing worries about consumption trends, while any improvement would need to be weighed against production adjustments set for the coming months.
For those involved in derivatives, short-term momentum will likely dictate positioning. Monitoring price action around these key levels will remain essential, as the recent downward bias has kept buyers at a disadvantage. Reactions to support and resistance zones will determine if the ongoing trend continues or if temporary recoveries emerge.
