Crude Oil Technical Analysis Summary

Date: February 7, 2025

Market Overview

Crude oil futures experienced a notable increase, settling at $67.45, marking a $2 rise despite several bearish indicators. Key factors influencing this movement included a surprising build in U.S. crude inventories and an increase in supply from OPEC+.

Inventory and Supply Dynamics

The Energy Information Administration (EIA) reported an unexpected build of 3.8 million barrels, significantly higher than the anticipated draw of 1.8 million barrels. Additionally, OPEC+ has increased its supply by 411,000 barrels per day as of July 1, with expectations for a similar increase in August.

Furthermore, the ADP employment report indicated a surprising drop in employment, falling well below the expected increase of 100,000 jobs, adding to the bearish sentiment.

Technical Analysis

Despite the bearish developments, a lower U.S. dollar provided some support for crude oil prices. From a technical perspective, the price broke above significant resistance levels:

• The topside range established since April 24.
• The 50% midpoint of the upward move from the April 9 low at $66.33.
• The 200-hour moving average, currently at $67.06.

These technical breaks have encouraged buying, suggesting a bullish outlook in the short term. The next key target for buyers is the $69 level.

Outlook

For the bullish momentum to continue, it is crucial for prices to remain above the aforementioned levels. A move back below the 50% midpoint and the 200-hour moving average would likely shift control back to sellers, indicating a potential reversal in trend.

Conclusion

The current technical indicators suggest a bullish sentiment in the crude oil market, despite underlying bearish fundamentals. Traders should monitor key support levels closely to gauge future price movements.