Fundamental analysis of WTI for 19.02.2024

The WTI oil market is in a volatile situation due to a number of factors affecting the global conjuncture. 

Rising inflation in the US and expectations that the Federal Reserve will soften its monetary policy have limited the growth of the oil market. The sharp rise in producer and consumer prices in the US has raised concerns that high inflation and weak demand for oil will persist. Expectations that the Federal Reserve will continue to postpone interest rate cuts on the 2024 horizon dominate the market, as evidenced by consumer and producer inflation data. 

In early trading on Monday, quotes fell to 77.60, reflecting lower trading activity due to the U.S. presidential day. The geopolitical situation, especially in the Middle East, remains tense. Incidents such as attacks on oil tankers by Houthi militants in Yemen and the ongoing war in Gaza are making the situation more insecure and volatile, which could lead to supply disruptions. 

Also weighing heavily on oil prices are concerns about global demand. For example, the International Energy Agency predicts that by 2024, countries such as the UK and Japan will see demand decline and begin to show signs of recession. However, the US production level will remain stable at over 13 million barrels per day. OPEC has plenty of spare capacity, which could help mitigate supply risks. The short-term market outlook appears bearish as the holidays in the US and China are expected to lead to lower retail sales. 

Factors such as inflation concerns, Fed policy expectations and geopolitical tensions in the Middle East play an important role in shaping the direction of the market. Oil prices are expected to move in a narrow range due to downward pressure from global economic concerns and increasing supply pressure. Market reaction to the Fed's policy update and new geopolitical developments will be crucial for the direction of oil prices. In addition, the IEA said that the balance in the oil market is shifting due to supply cuts in the US and Canada, but lowered its forecast for global oil demand growth in 2024 due to developments in China. Inventories are expected to rise slightly in the first quarter of this year despite OPEC+ production cuts, adding new layers to the global oil market picture.


Technical analysis and scenarios:

At the current price of 77.70, it is trading just above the middle Bollinger Band (77.30), indicating a neutral or slightly bearish stance in the context of recent price movements. The proximity to the middle band suggests that the market is in equilibrium, but with a slight downward bias given the recent price decline within the upper range of the indicator. The horizontal direction of the Bollinger Bands indicates relatively low volatility with a wide price range in the recent past, suggesting that the market is in a consolidation phase. The fact that price is declining within the upper range of the indicator but has not yet broken down suggests that there is still uncertainty about the direction of the next major move.

Main scenario (BUY)

Recommended entry level: 78.70

Take Profit: 79.55

Stop Loss: 78.25

Alternative scenario (SELL)

Recommended entry level: 77.00

Take Profit: 76.10

Stop loss: 77.50