After a sharp decline from the April high, crude oil prices found again support below $64 against the US Dollar. During the last week, the US WTI oil price rebounded back to above $73 while the market gave up those gains towards the end of the week due to the fears of a US economic slowdown and crude demand concerns emerged from both the US and China. Trade data from the world's largest importer, China showed that crude oil imports fell 16% annually to 10.6 million barrels per day in April.

A slightly stronger dollar also giving some additional pressure on commodities. However, the previous week's rise in the price of crude shows that the investor demand for black gold is regaining once again, and we should still see oil prices stabilize in the medium term.

On the positive side, U.S. Energy Information Administration revised higher its global oil demand outlook through 2024. "Although demand growth for liquid fuels faces downside risks through the end of 2024, we expect the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months," said EIA in its monthly report.

Crude prices filled the gap made by the OPEC+ production cut

Oil prices started the second quarter of 2023 on a brighter note boosted by the surprise announcement by OPEC+ to cut production of more than 1 million barrels a day, which created a bullish gap in the price. However, by the end of April oil prices reversed all their gains from the OPEC move and filled the gap made by the OPEC+ production cut announcement, which brought the price back to below the yearly lows.

In the last 4-week, growing concerns about a potential US recession and a notable acceleration in implied U.S. oil production have spurred a material sell-off in oil. Considering the strong sell-off the US oil prices regained momentum after it found a double-bottom below $64. Moving ahead, this week Investors now look ahead to the Chinese economic data on Tuesday and weekly crude inventory data on Wednesday for some clarity on how the market may perform in the coming days.

US WTI technical outlook

US WTI crude futures started this week with a positive price action. The daily chart shows that the price slightly rebounded in the past few weeks, but the overall momentum remains mixed. On the upper side, $73.80/74 (the previous week's high) remains the key resistance to watch, the bullish breakout of $74 is likely to push the US WTI crude into a new trading zone, which may offer further buying opportunities until $76.50 then $80.50. On the downside, the $64 level has shown itself to be supportive in the last few days, and there was a lot of choppy action there. In case the price breaks and closes below the $64 area then the forecast will become extremely bearish. This might result in a much bigger price drop below $60.

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