Crude Oil slips further, WTI tests below $78.00 as OPEC cuts fail to spark rally

Crude Oil markets waffled on Tuesday, dragging West Texas Intermediate (WTI) US Crude Oil further down the charts to test below $78.00 per barrel as a long-awaited uptick in Chinese Crude Oil demand fails to materialize.

The Organization of the Petroleum Exporting Countries (OPEC) recently announced a broadly-anticipated extension to first-quarter production caps that were meant to bolster global prices of Crude Oil. Despite OPEC continuing to crimp output of its member states, production from non-OPEC nations, notably the US, continues to climb, and far-off expectations of possible refining curtailing have yet to materialize.

An unseasonally warm winter saw heating oil demand draw down supplies far less than expected as the northern hemisphere exits the cold months, and energy markets have begun to show signs of fatigue waiting for an uptick in Chinese Crude Oil demand that has yet to materialize. China has targeted growth of 5% in 2024, and while Chinese central planners are likely to hit their own targets, the comparatively sedate growth figure leaves little room for a supply-eating expansion in China’s Crude Oil demand.

Ongoing chatter of a possible ceasefire in the Gaza conflict is also weighing on Crude Oil bids. Houthi rebels attacking civilian cargo ships in the Red Sea is also seeing an increasingly limited market impact, as most shipping lanes have rerouted away from crossing the Suez Canal.

WTI technical outlook

WTI extended a decline from last week’s peak at 80.33, declining through near-term congestion at the 200-hour Simple Moving Average (SMA) at $77.98. US Crude Oil is finding near-term technical support at the $77.50 level, and barrel bids are testing on the low side of $78.00 per barrel.

Tuesday’s WTI decline sees US Crude Oil prices testing back into the 200-day SMA at $77.80, and WTI is slumping back into rough technical consolidation. Crude Oil is struggling to extend bullish momentum after a recovery from the last swing low into $71.50.

WTI hourly chart

WTI daily chart