Piece Written By Nkosilathi Dube, Trive Financial Market Analyst 

Embarking on a second consecutive week awash in red, the WTI Crude Oil Futures (NYMEX: CL) faced a 2.84% decline during the week of August 21. Recent weeks have seen a landscape favouring safe-haven assets, ushering the Greenback into ascendancy. The Greenback’s allure was fortified by a robust labour market and the Federal Reserve’s hawkish undertones, offering high yields and a safety haven. Concurrently, the spectre of a subdued Chinese economic rebound cast shadows on oil futures, igniting queries about the robustness of oil demand.  

With three successive days of declines poised to intersect with pivotal upcoming economic events, a glimmer of positivity for the oil futures emerged. Wednesday unveiled a bullish revelation through the EIA’s report of a 6.135M crude oil inventory drawdown, surpassing expectations threefold. This unexpected insight hints at resilience in crude oil demand, a potential buoyant force for the oil futures market. 

Technical 

Following an impressive bullish surge, a seismic shift in the demand outlook triggered a domino effect of downside pressure. The narrative gained momentum as an ascending channel pattern, once a beacon of an uptrend, succumbed to a bearish breach. A consequential crossing beneath the 100-day moving average illuminated the path of a downtrend, validating its grip. 

The market’s rejection of the 100-day moving average culminated in a resolute resistance point at 81.75 per barrel (BLL), leading to a plummet. Amidst this turmoil, a support emerged at the 77.62 BLL level, propelling the oil futures marginally higher. 

Presenting an interim resistance juncture, the 38.20% level tantalizes with potential. Should upward momentum persist, an upside prospect exists, with an ascent towards the Golden Ratio at 80.17 BLL. Conversely, the 77.62 BLL level assumes a role of significance, serving as a gravitational point should the downtrend endure.   

Summary 

The stage is set for a significant chapter driven by approaching economic cues as the oil futures course develops, with the upcoming release of U.S. durable goods orders and jobless claims statistics. However, the grand finale will take place on Friday when Fed Chair Jerome Powell addresses the Jackson Hole Symposium. The Greenback’s appeal as a high-yielding asset might resurface if his speech affirms sustained higher U.S. interest rates, shining a spotlight on the 77.62 BLL level as a short-term prospect. 

Sources: EIA, Reuters, TradingView