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WTI Crude Oil Corrective Decline may be Temporary
12/28/2022 12:42 PMQuotes of WTI Crude Oil have been rising for two weeks in a row, reaching 81.25 (Murrey level [2/8]), but they failed to break above it and are currently trying to correct downwards.
The market is under the influence of opposite factors, as the prospects for a recovery in the Chinese economy are leveled by fears of lower demand for oil and fuel in the US due to a snow storm that hit the country. Chinese authorities have moved to a gradual easing of restrictive measures and are going to lift the quarantine for foreign citizens arriving in the country next week. This gives investors hope for an early increase in oil consumption in the second world economy.
On the other hand, snowstorm Elliott, which hit most of the US, could cause the traditional Christmas travel season to be canceled and, as a result, reduce fuel and oil consumption. Currently, thousands of air flights have been canceled across the country, and movement on roads is difficult due to snow drifts. In addition, infrastructure was damaged in a number of states; in particular, power plants were turned off. All this hinders the further growth of oil prices.
The day before, Russian authorities officially imposed a ban on the supply of "black gold" to countries and organizations that support the price ceiling previously introduced by the G7 countries, but this decision did not affect the market, since it was announced in advance and investors were ready for it.
Today, weekly data on US oil inventories from the American Petroleum Institute (API) will be released. Last week, the figure fell by 3.069 million barrels. The continuation of this trend may return the price to an upward movement.
The price is correcting from 81.25, but to change the current short-term uptrend, it will have to consolidate below the center line of Bollinger Bands (76.80). In this case, the decline may continue to the levels of 71.88 (Murrey level [-1/8]), 70.50 (December lows). The level of 81.25 (Murrey level [2/8]) remains key for the "bulls". Its breakout will give the prospect of growth to the levels of 84.38 (Murrey level [3/8]) and 87.50 (Murrey level [4/8]).
Technical indicators don't provide a clear signal: Bollinger Bands reversed horizontally after the decline, MACD is preparing to move into the positive zone, and Stochastic is reversing downwards near the overbought zone.
Resistance levels: 81.25, 84.38, 87.50. | Support levels: 76.80, 71.88, 70.50.