WTI remains above four-month low hit on Thursday and appears vulnerable to further decline

• WTI consolidates the sharp fall of the previous day after reaching its lowest level since July 10.
• Concerns about global demand turn out to be a key factor weakening the WITI price.
• The Fed’s moderate expectations continue to weigh on the dollar, although they do not provide much support.

West Texas Intermediate (WTI) Crude Oil prices oscillate within a narrow range at the start of the European session on Friday and consolidate the previous day’s drop to lows in more than four months. The commodity is currently trading just above the $73.00/barrel level and remains on track to post losses for the fourth consecutive week.

The weakening US macroeconomy adds to fears of a deeper global economic recession, which is expected to dent fuel demand and continue to undermine crude oil prices. U.S. monthly retail sales fell for the first time in seven months in October and pointed to a slowdown in demand at the start of the fourth quarter. Additionally, the number of Americans filing for unemployment insurance for the first time increased to 231,000 during the week of November 11, up from 218,000 previously (revised from 217,000).

This adds to the persistent concern about a slowdown in China – the world’s largest oil importer – and the attenuation of fears of a supply interruption from the Middle East, which validates the negative outlook for the black liquid. Meanwhile, bets that the Federal Reserve (Fed) has ended its monetary policy tightening campaign and could begin cutting rates in the first half of 2024 keep US Dollar (USD) bulls on the defensive. . However, the dollar’s weakness is neither helping the bulls nor supporting oil prices.

The commodity’s inability to attract buyers or post a significant recovery suggests that the downtrend could still be far from over. However, the technical indicators on the daily chart are about to break the oversold zone, so it would be prudent to wait for a short-term consolidation or a moderate bounce before the next rally. However, oil prices seem destined to register losses of more than 5% for the week.

WTI technical levels to watch