While analyzing the movements of the crude oil WTI futures this Saturday, in different time frames, I observed the impact of Chinese demand destruction due to growing lockdowns to stop hyper-infectious omicron variant. This seems to be a significant setback for oil bulls as the WTI Crude Oil futures continued to slide during the last week after testing a high at $105.59 on Apr. 4, 2022.
The flow of Russian crude oil into the major oil-exporting countries, even at the discounted price of $30 per barrel, could be another setback for the oil bulls. Oil prices started an uptrend from $7 in September 2021, when the US intelligence officers noticed an unusual Russian military movement in Ukraine.
Undoubtedly, this uptrend witnessed a sudden steep surge from Feb. 24 with the Russian invasion of Ukraine. The international community agitated over this inhuman act by Russia by imposing harsh sanctions, and this global reaction propelled the fear of oil supply disruption, resulting in a rally in oil that hit $130.63 on Mar. 7.
After testing this peak, the WTI crude oil futures found a sharp selloff even on the same day with immediate support at $117 for the next day. This slide continued since Mar. 9 and tested a low at $93.67 on Mar. 15, which seems to be immediate support for the WTI crude oil.
But still, exhaustion seems to be on the card as the oil is losing steam due to the joint efforts of the oil reserve release by the US and the IEA countries, along with weakening demand amid China extending lockdowns.
Technically speaking, in a weekly chart, the WTI crude oil futures look weak after the constant slide during the past few weeks amid tough sanctions by the US and its allies, holding just below the 26 DMA, which is currently at $96.47 and could turn into an immediate resistance for the WTI crude.
In a daily chart, the formation of a bearish crossover on Mar. 21, with 9 DMA crossed downward 26 DMA, looks evident enough to keep the WTI crude oil under bearish pressure. And finally, a breakdown below $91 could push the WTI crude oil to test the 200 DMA, which is currently at $81 in a daily chart.
In an hourly chart, the oil prices are constantly moving downward well below the 200 DMA, ensuring a steep fall any time during this week.
In the 15 minutes chart, the formation of a bearish crossover shows the thick presence of the oil bears at current levels as the crude oil futures are currently holding at 9 DMA, which is currently at $95.79. I find that a breakdown below $93 in today’s trading session will confirm the advent of a selling spree.
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