Weekly Outlook on Crude Oil- 24 Feb 2023

Higher inflation data dented oil sentiments on Wednesday; prices fell by $2 per barrel to their lowest in two weeks, as investors were more concerned about the recent data that will prompt more aggressive interest rate hikes by central banks, pressuring economic growth and oil demand.

However, crude oil prices recouped the weekly losses on Thursday on the prospect of tight supply from Russia as the country plans to cut oil exports from its western ports by up to 25% in March, which exceeded its announced production cuts of 5 lakh barrels per day.
 

Crude oil prices extended their gains for a second session on Friday as the prospect of deeper-than-expected cuts in Russian supplies offset rising interest rates and higher inventories concerns in the United States.

On the NYMEX exchange, the price has reversed from the Lower Bollinger Band formation on the daily chart. However, the prices are still being traded below the Ichimoku Cloud and 100 days SMA, which suggests weakness for the longer timeframe. In the recent trade, the price has formed a Tweezer bottom candlestick pattern, which indicates a slight pullback on the counter. On the downside, the price has good support around $72.25 and $68 levels, while on the upside it may find the resistance around $80.70 and $83.30 for the near term.

On the domestic front, the MCX crude oil prices rebounded after a fall on Wednesday and are set to trade above the prior week's close. On the daily chart, the price has taken a Trendline support and reversed further with good volume activities that suggest further recovery for the near term. Moreover, the stochastic indicator suggested positive crossover on the daily scale. On the downside, the oil price has support at 6000/5800 levels. While, on the other hand, it may test the resistance at 6580 and 6770 levels.

Hence, traders are advised to look for buying above 6370 mark for the immediate target of 6580 and 6770 levels with a strict SL of 6140 on a closing basis, below that level the buying view will be negated.  

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