Oil setting itself up for a rebound after six days of selling
Updated
Amid a quick change in the market sentiment in mid-April 2024 and subsequent weakness in stocks, West Texas Intermediate crude oil (USOIL) retreated from its highs to $78 per barrel. In the process, USOIL broke below the lower bound of the ascending channel, and the daily time frame turned bearish, with MACD crossing below the midpoint, Stochastic falling into the lower area, and RSI approaching 30 points. The weekly time frame also turned slightly bearish, with MACD, Stochastic, and RSI reversing; nevertheless, it must be noted that MACD remains in the bullish zone, and ADX contains a relatively low value, hinting at a neutral or very weak trend on the medium time frame. As for the monthly time frame, technicals indicate a sideways-moving market as well.
From a bigger perspective, USOIL appears in the range that has been under development since early 2023, defined by roughly $83 on the top and $70 on the bottom. In the smaller picture, USOIL experienced a decline of approximately 11% just within the past six trading sessions, potentially setting it up for a rebound; should it occur, close attention will be paid to the resistance level at $79.72, which has acted as a barrier on multiple occasions throughout the past half year. In the event of a failure, the attention will be shifted to the support at $76.82 and $75.56, where buying interest might emerge.
Illustration 1.01
The image above shows USOIL’s daily chart. The yellow arrow indicates a breakout below the lower bound of the channel.
Illustration 1.02
The illustration above depicts the daily graph of MACD. The yellow arrow highlights a crossover through the midpoint, normally a bearish development.
Technical conditions
Daily time frame = Bearish
Weekly time frame = Slightly bearish (weak trend)
Monthly time frame = Neutral
OPEC’s workshop
As a result of the directives of the OPEC’s meeting held on 3rd April 2024, member countries with outstanding overproduced volumes were required to submit detailed compensation plans by 30th April 2024. In accordance with that, OPEC held a workshop on 3rd May 2024 to share compensation plans for Iraq and Kazakhstan for their outstanding overproduced volumes for the months of January, February, and March 2024, which totaled about 602,000 barrels per day for Iraq and 389,000 barrels per day for Kazakhstan.
Houthi’s aggression
Yemen's Houthi attacks on commercial shipping are escalating and spreading beyond the confines of the Red Sea. After the targeting of the MSC Orion on 26th April 2024, positioned 600 kilometers (375 miles) off Yemen's coast, another assault occurred merely two days later, on 29th April 2024, hitting the ship Cyclades near Mokha, Yemen. This increasing aggression highlights the region's growing instability, compounded by the United States and its allies' failure to curb the situation through airstrikes on Yemeni targets earlier this year.
Hamas-Israel negotiations
After months of stalled negotiations, Hamas representatives arrived in Cairo, Egypt, over the weekend for another round of ceasefire talks with Israel. Major media outlets reported that a truce is closer than ever before. Nonetheless, significant hurdles remain beneath the surface as both sides hesitate to make concessions. Hamas is adamant about the withdrawal of Israeli forces from Gaza and obtaining a guarantee from the United States that Israel will not launch a ground invasion of Rafah. Meanwhile, Israel maintains its stance that it will proceed with the invasion regardless. In addition to that, Israel’s hawks are vocal that even if a ceasefire deal is reached, it will not mark the end of the war.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
From a bigger perspective, USOIL appears in the range that has been under development since early 2023, defined by roughly $83 on the top and $70 on the bottom. In the smaller picture, USOIL experienced a decline of approximately 11% just within the past six trading sessions, potentially setting it up for a rebound; should it occur, close attention will be paid to the resistance level at $79.72, which has acted as a barrier on multiple occasions throughout the past half year. In the event of a failure, the attention will be shifted to the support at $76.82 and $75.56, where buying interest might emerge.
Illustration 1.01
The image above shows USOIL’s daily chart. The yellow arrow indicates a breakout below the lower bound of the channel.
Illustration 1.02
The illustration above depicts the daily graph of MACD. The yellow arrow highlights a crossover through the midpoint, normally a bearish development.
Technical conditions
Daily time frame = Bearish
Weekly time frame = Slightly bearish (weak trend)
Monthly time frame = Neutral
OPEC’s workshop
As a result of the directives of the OPEC’s meeting held on 3rd April 2024, member countries with outstanding overproduced volumes were required to submit detailed compensation plans by 30th April 2024. In accordance with that, OPEC held a workshop on 3rd May 2024 to share compensation plans for Iraq and Kazakhstan for their outstanding overproduced volumes for the months of January, February, and March 2024, which totaled about 602,000 barrels per day for Iraq and 389,000 barrels per day for Kazakhstan.
Houthi’s aggression
Yemen's Houthi attacks on commercial shipping are escalating and spreading beyond the confines of the Red Sea. After the targeting of the MSC Orion on 26th April 2024, positioned 600 kilometers (375 miles) off Yemen's coast, another assault occurred merely two days later, on 29th April 2024, hitting the ship Cyclades near Mokha, Yemen. This increasing aggression highlights the region's growing instability, compounded by the United States and its allies' failure to curb the situation through airstrikes on Yemeni targets earlier this year.
Hamas-Israel negotiations
After months of stalled negotiations, Hamas representatives arrived in Cairo, Egypt, over the weekend for another round of ceasefire talks with Israel. Major media outlets reported that a truce is closer than ever before. Nonetheless, significant hurdles remain beneath the surface as both sides hesitate to make concessions. Hamas is adamant about the withdrawal of Israeli forces from Gaza and obtaining a guarantee from the United States that Israel will not launch a ground invasion of Rafah. Meanwhile, Israel maintains its stance that it will proceed with the invasion regardless. In addition to that, Israel’s hawks are vocal that even if a ceasefire deal is reached, it will not mark the end of the war.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
Note
Reportedly, Israeli forces issued a call to evacuate civilians in part of Rafah after Hamas claimed responsibility for a deadly rocket attack.Note
Israel is proceeding with the ground invasion of Rafah amid stalling talks.
Disclaimer
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