WTI falls back towards $70 per barrel as Crude Oil extends declines

West Texas Intermediate (WTI) Crude Oil bids fell on Tuesday following a reversal from the day’s early peak near $73.70, sending barrel bids back toward the $70.00 handle as energies markets face downside pressure from multiple fronts.

Weekend reports of ongoing attacks on cargo ships in Houthi-rebel-controlled waters off the coast of Yemen sparked a brief rally in Crude Oil bids, bolstered by reports that an Iranian warship had entered the region. Iranian-back Houthi rebels have declared their intent to continue attacking ships that travel through the key waterway that connects Europe and Asia, but a majority of logistics companies that initially diverted cargo ships around South Africa have resumed traveling the contested waters under the protection of a coalition naval fleet headed by US warships.

Market fears of supply disruptions remain unrealized, deflating near-term price increases, and near-term action sees a fresh round of selling pressure after production figures from the Organization of the Petroleum Exporting Countries (OPEC) unexpectedly rose, adding 48K barrels per day to monthly production of 26.53 million bpd.

Adding to downside pressure, economic data from the US missed the mark once again, with the S&P Global Manufacturing Purchasing Managers’ Index (PMI) for December sliding to a four-month low of 47.9. Markets were broadly expecting the figure to hold steady at November’s figure of 48.2, and a softening economic outlook for the US is driving down risk appetite, sending Crude Oil further down the charts as investors back into the safe haven US Dollar and sell off equities and commodities to kick off the 2024 trading year.

WTI Technical Outlook

Tuesday’s sharp rejection from the 200-hour Simple Moving Average (SMA) near $73.75 leaves WTI pushing into fresh lows and set for a challenge of the $70.00 major handle. Crude Oil is sharply lower from last week’s peak of $76.22, down nearly 8% peak-to-trough as barrel bids slip away from the 200-day SMA parked near $78.00.

Crude Oil is steadily trending lower, heading for December’s floor near $68.00 as price action looks set to continue accelerating into the low side with WTI set for a fourth consecutive down day on the daily candlesticks as bids see a technical ceiling from the bearish crossover of the 50-day and 200-day SMAs.

WTI Hourly Chart

WTI Daily Chart

WTI Technical Levels