Oil Price Forecast: Crude Technical Outlook Mired By RSI Sell Signal

The recent weakness in the price of oil appears to be a sign of exhaustion rather than a change in the broader trend as it pulls back from channel resistance, and crude prices may consolidate over the remainder of the month as the bullish momentum abates, with the RSI registering a reading below 70 for the first time since the start of February.

It remains to be seen if fresh data prints coming out of the US will prop up oil prices as crude inventories contract for the fifth consecutive week, with stockpiles narrowing 7.258M in the week ending February 12, while oil production remains at its lowest level since 2018.

Image of EIA Weekly US Field Production of Crude Oil

The update from the Energy Information Administration (EIA) showed crude production slipping to 10,800K from 11,000K in the week ending February 5, and signs of stronger consumption paired with ongoing weakness in crude output may keep oil prices afloat even as the Organization of the Petroleum Exporting Countries (OPEC) Secretary-General, Mohammad Barkindo, pledges to “act in the interests of producers and consumers.”

Barkindo emphasized that OPEC and its allies “seek to contribute to greater stability, more predictability and enhanced transparency” while speaking at the 11th IEA-IEF-OPEC Symposium on Energy Outlooks, and key market themes may keep the price of oil afloat ahead of the next OPEC Joint Ministerial Monitoring Committee (JMMC) meeting on March 3 as Saudi Arabia remains on track to reduce supply by 1 million b/d until April.

With that said, the price of oil may continue to retrace the decline 2020 high ($65.65) as it still tracks the upward trending channel established in November, but crude prices may face a larger correction over the remainder of the month as the Relative Strength Index (RSI) falls back from overbought territory to indicate a textbook sell signal.

OIL PRICE DAILY CHART

Image of Oil price daily chart

Source: Trading View

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