Crude Oil Price Forecast: This Week Up, Next Week Down

Fundamental outlook

Crude oil futures rose yesterday and it is highly expected to retest the previous peak at around 68$ in the coming days before the fed meeting next week.

The Energy Information Administration report on U.S crude oil inventories showed crude stockpiles surge by 13.8 million barrels last week.

However, many other factors offset the bearish EIA inventories report.

oil rigs

Firstly, the EIA report itself reported a surge in gasoline demand, which is a good sign for recovery in transportation, mobility, and overall economic activity.

The U.S stimulus relief package has been approved on Wednesday and waits for President Joe Biden's signature on Friday, which is expected to stimulate growth and business conditions as well as to help families and small businesses. All that is expected to increase oil and energy demand.

 Another major factor is the recent decline in the dollar which will drive oil prices higher before the fed meeting next week.

ahead of the FOMC meeting on Wednesday, March 17, we expect a rise in the dollar and markets volatility, as the Fed chair Jay Powell is expected to comment on the recent rise in inflation and possible monetary policy tools to use if inflation spikes further at a higher momentum, which what we do expect.

Technical analysis

In the long term, crude oil has made a strong upward breakout of the long-term downtrend. Which makes the case for a possible retest from above before resuming the upward move.

(Click on image to enlarge)

crude oil technical chart

In the intermediate-term, the price is trending higher far above the previous two quarters' price levels of 38.60$.

In the short term, the oil futures price is trading above the past 3 weeks level of 60.27$ with more ups and downs, which indicates a rise in volatility and a decrease in momentum. This combination is a warning indicator for a possible pullback in the price.

(Click on image to enlarge)

crude oil technical chart

The possible price retracement is also indicated through the RSI bearish divergence pattern and its pullback from the overbought zone.

Disclaimer: Opinions expressed in our article are based on current market conditions and are subject to change without notice. These opinions are not intended to predict or guarantee the ...

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