WTI Crude Oil Price Analysis – March 16, 2023

Daily Price Outlook

The WTI Crude Oil Futures are trading at 68.42, indicating a 1.20% increase in the last 24 hours. On Thursday, oil prices significantly recovered after hitting their lowest in 15 months the day before.

This occurred as the markets stabilized after Swiss authorities provided Credit Suisse with a financial lifeline, and optimistic forecasts for a Chinese economic boom helped raise expectations for a rise in demand this year.

Optimistic Forecast for China's Economic Growth

Investment bank Goldman Sachs has raised China's annual economic growth forecast from 5.5% to 6%, citing encouraging trends after the nation relaxed most anti-COVID measures earlier this year. The estimate, which exceeds the 5% predicted by the Chinese government, has fuelled optimism that a Chinese rebound could drive oil demand to record highs this year.

In addition, the International Energy Agency's monthly report on Wednesday predicted an increase in oil consumption due to the resumption of air travel and China's economic recovery following the abandonment of its zero-COVID policy. OPEC has also raised its 2023 demand forecast for China.

As a result, oil prices have steadily risen from their lows, with expectations for a strong demand comeback this year.

Swiss Central Bank Provides Financial Lifeline to Credit Suisse

Meanwhile, on Thursday, Credit Suisse announced that it would borrow up to $54 billion from the Swiss central bank to boost its liquidity and regain investor confidence following a decline in its stock price, which raised concerns about a possible global financial crisis.

The news of Credit Suisse's financial lifeline provided some relief to the markets, leading to a recovery in oil prices as market sentiment stabilized.

Dovish Fed Expectations Contribute to Rise in USOIL Prices

US inflation figures indicate a slowdown and economic downturn, leading to predictions of only a 25 basis point increase in the federal funds rate by the Federal Open Market Committee (FOMC) during its March 22 meeting. These dovish expectations resulted in a decline of the US dollar, with DXY currently trading at around 104.43.

Additionally, ongoing volatility in banking stocks and changing interest rate forecasts caused the US 10-Year Treasury Yield to fall to 3.489%. A weak dollar, which makes crude oil cheaper for foreign customers, also contributed to the strengthening of oil prices.

USOIL Intraday Technical Levels

Support      Resistance

65                72

62                76

58                79

Pivot Point: 69

USOIL – Technical Outlook

The price of crude oil has dropped below the $66.00 level, and although there have been some attempts at a recovery (with the price currently testing the $68.00 level), it remains under negative pressure from the EMA50 and is expected to continue declining in the coming trading sessions.

Looking at the chart on a longer time frame, we see that the price has formed a head and shoulders pattern with negative targets that extend down to 48.50 areas initially and 30.15 after surpassing the previous level. However, these levels represent correctional levels for the bullish wave shown on the chart.

Since continuing to rise and break through 69.25 could push the price to make greater gains and test 71.45 before any new decline, we believe that the bearish trend will persist in the short and medium term.

Today's trading range can be between support at $65.70 and resistance at $69.50.