Fundamental analysis of WTI for 08.02.2024

WTI crude oil prices are fluctuating around 74.30. This rise contradicts the US Energy Information Administration report, which showed a significant increase in crude oil inventories, and the American Petroleum Institute report, which showed a smaller than expected increase in oil production. 

Judging by recent developments, geopolitical tensions in the Middle East, especially the conflict between Israel and the Gaza Strip, have been the main reason for the rise in WTI crude oil prices. Tensions in the Gaza Strip are rising, with violence and arrests continuing after Israeli Prime Minister Benjamin Netanyahu rejected a ceasefire offer from Hamas. Although the oil market has been under pressure since October, there is still hope, with the Hamas group led by Khalil Hayya planning to hold ceasefire talks with Egyptian and Qatari representatives in Cairo. 

The sharp drop in the dollar has made oil cheaper in other currencies, helping to push prices higher. In addition, data from the U.S. showed a sharp decline in gasoline and intermediate fuel inventories, indicating strong demand, which is supported by an increase in annual U.S. crude oil sales to a record 4 million barrels per day by 2023. In addition, forecasts for the Permian shale basin, the largest oil field in the US, show slow annual growth from 2021, which will lead to a slowdown in American production growth. Combined with the EIA's forecast that US oil production growth will slow in 2024, these developments support a positive outlook for the oil market in the near term. 

Oil market conditions are constantly changing due to the complex interplay between geopolitical uncertainty, economic conditions and oil supply conditions. Traders and investors are advised to pay close attention to current geopolitical events and changes in economic conditions that may affect market conditions.

Technical Analysis and Scenarios:

The current price position near the upper band of the Bollinger Bands (at 74.75) indicates that WTI is trading at the higher end of its recent volatility range, indicating the strength of the current uptrend. The upward direction of the bands also reflects rising volatility, which could set the stage for significant price moves. The wide price range between the upper and lower bands (74.75 and 71.90, respectively) allows for significant swings, but rising prices in the upper band signal that buyers remain in control. Given the current price dynamics and technical indicators, the short-term outlook looks bullish and WTI oil prices could test the nearest resistance levels. In particular, if the price consolidates above the upper Bollinger Band or even breaks the 74.80 resistance level, it could set the stage for a move towards 75.50 and possibly 76.10.

Main scenario (BUY)

Recommended entry level: 74.80

Take Profit: 75.50

Stop loss: 74.40

Alternative scenario (SELL)

Recommended entry level: 73.50

Take Profit: 72.80

Stop Loss: 73.15