WTI Crude Oil – Technical Chart

Crude Oil Has More Downside

The short term outlook for WTI crude is STILL very bearish and volume analysis on CLG24 (WTI) suggests that price is being propped up here. There is liquidity detected in the 75.75 – 76.50 area where sellers may take it and resume control.  Anticipating further drop in oil prices to continue into the new year.  U.S. oil production is at record highs and there is a supply build up from too many non-OPEC+ producers. Growing exports against the backdrop of  weakening global manufacturing conditions are bearish for the short term price of oil.  This is NOT yet priced in to WTI. It’s safe to say that the production cuts failed and the implications of that far outweigh geo flare-ups in the Red Sea. Saber rattling can ratchet up fear but the facts here must overide the perceptions.  The situation is fluid and despite the recent ship attacks, there is confirmation that the multi-national security initiative Operation Prosperity Guardian (OPG) is set up, deployed, and in effect to restore and allow passage through the Suez Canal. The macro outlook has to be respected here.  It is likely that demand weakness will outweigh these potential disruptions and reveal itself in lower oil prices in the upcoming weeks along with negative seasonality.  With crude in contango, it is signaling that the market has become oversupplied and inventories will build up into the new year.  Note also that COP28 resulted in a historic and symbolic agreement that marks a sea change that even big oil execs are accepting.  Renewable energy is currently checking the oil industry and pressing hard for a new global trend.  Angola’s is not a large player but their decision to quit the cartel only weakens the solidarity of the group.  It could set the precedent for other African nations to follow. With Brazil newcomers joing the group, it’s not a good look for OPEC+ to lose its grip here.  The target price for CL into this new year is 64.50 – 66.25.

Short Term Outlook: VERY BEARISH

Short Term Price Target:   71.05

Long Term Price Target:  64.50

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