Black Gold Glimmering

London: 15 March 2024 (TraderMade): This week's oil story is one of resilience, with prices poised for a significant weekly increase despite a slight drop on Friday.

Key Takeaways

• Crude oil prices are on their way to a weekly gain exceeding 3%.
• The IEA's revised demand forecast and declining US stockpiles are key drivers.
• A strong dollar, Fed policy decisions, and China's slowdown pose uncertainties.

Key Drivers of the Upswing

Demand on the Rise

The International Energy Agency (IEA) boosted its 2024 oil demand forecast for the fourth time since November, citing disruptions in the Red Sea. This positive outlook anticipates a global increase of 1.3 million barrels per day (bpd).

Supply Shrinks

Unexpectedly, US crude stockpiles dwindled last week as refineries ramped up activity. Additionally, drone strikes on Russian oil facilities further tightened supply.

OPEC+ Cuts Extend Impact

OPEC+'s decision to maintain production cuts also contributed to the price rise, potentially leading to a supply deficit this year.

Brent Crude (UKOIL) Weekly Trajectory: 8 March - 15 March 2024

Brent Crude (UKOIL) prices experienced a bullish run this week, closing at $84.81 on Friday, 15 March.

Brent Crude (UKOIL) surged over 3% to $84.81 a barrel from the previous Friday's close of $81.57.

The week started with a consolidation phase, with prices hovering between $81.46 and $83.53. A breakout occurred on Wednesday, 13 March, as prices surged above $83 and continued their climb throughout Thursday and Friday. This uptrend was supported by highs of $85.23 on Thursday and $84.93 on Friday.

Overall, the technical indicators suggest a positive short-term outlook for Brent Crude. The consecutive higher closes throughout the week and the break above resistance at $83.50 are bullish signals.

Here are some additional technical observations:

• Trading Volume: Data on trading volume would be beneficial to confirm the strength of the recent price increase. Higher volume on breakout days suggests stronger buyer conviction.
• Moving Averages: Analyzing the position of key moving averages (e.g., 50-day, 200-day) relative to the current price could provide further insights into the short-term and long-term trends.

WTI Crude (OIL) Weekly Trajectory: 8 March - 15 March 2024

WTI Crude (OIL) prices mirrored the bullish sentiment in Brent Crude this week but with a slightly smaller overall gain. Closing Friday, 15 March, at $80.25.

WTI rose almost 3.7% from the previous Friday's close of $77.39.

The week began with a period of consolidation, with prices trading within a relatively tight range between $76.46 and $79.47.

Similar to Brent Crude, a breakout occurred on Wednesday, 13 March, with prices surging above $79 and continuing their climb throughout Thursday and Friday. This uptrend was supported by highs of $81.07 on Thursday and $80.76 on Friday.

Similarities to Brent Crude

• Upward Trajectory: Both WTI and Brent Crude saw a bullish week with consecutive higher closes and a break above resistance levels.
• Breakout Timing: The price increases for both crudes accelerated on the same day (Wednesday, 13 March).

Differences from Brent Crude

• Starting Point: WTI began the week at a lower price point compared to Brent Crude.
• Magnitude of Increase: The overall gain for WTI was slightly smaller than the gain for Brent Crude.

Overall: The technical indicators suggest a positive short-term outlook for WTI Crude, mirroring the sentiment for Brent Crude. The consecutive higher closes and the break above resistance at $79 are bullish signals.

Some additional points for a comprehensive analysis:

• Trading Volume: Higher volume on breakout days would strengthen the conviction behind the recent price increase.
• Moving Averages: Analyzing the position of key moving averages relative to the current price could provide further insights into the short-term and long-term trends.

Headwinds and Uncertainties

Profit Taking

Friday saw a small correction as some investors cashed in on recent gains, leading to a slight price dip.

Strong Dollar

A strengthening US dollar can make oil more expensive for buyers using other currencies.

Federal Reserve Policy

The upcoming Federal Reserve meeting next week is being closely watched. Hawkish signals regarding interest rates could dampen economic activity and oil demand.

China's Economic Slowdown

Concerns about China's economic health could further limit demand growth.

Summarizing

Brent Crude (UKOIL) surged over 3% this week, closing at $84.81 on Friday. The week started with consolidation before a breakout on Wednesday, with prices continuing to climb throughout the rest of the week.

WTI Crude (OIL) mirrored Brent Crude's trend but with a slightly smaller gain of nearly 3.7%. It closed Friday at $80.25. Similar to Brent Crude, WTI saw a breakout on Wednesday, followed by price increases.

Overall, the oil market is focused on tightening supply and a potentially brighter demand outlook. But the path forward remains clouded by the headwinds mentioned above.