Oil Prices Stabilize After Recent Dip, Traders Eye Key US Data

: George Solotarov; 26 February 2024; Hits: 158

Oil Prices Stabilize After Recent Dip, Traders Eye Key US Data

After last week's downturn erased earlier gains, oil prices are finding some footing this Monday. Market focus this week shifts to an energy summit in London, where comments from industry leaders may influence sentiment. Additionally, Goldman Sachs’ recent Brent price target of $87 per barrel suggests limited short-term upside potential amid current conditions.

The softening US Dollar Index (DXY) ahead of this week's crucial US economic data releases adds another layer of market anticipation. The second GDP reading and Personal Consumption Expenditures (PCE) will provide crucial insights into the state of disinflationary trends following the recent CPI surprise. Subsequently, expect volatility in the US dollar, which in turn could trigger significant oil market reactions. At press time, Crude Oil (WTI) trades at $76.23 per barrel, while Brent Oil stands at $80.69 per barrel.

Technical Analysis: Oil Faces Challenges

Oil's recent dip below the 100-day Simple Moving Average (SMA) at $76.46 signals a potentially bearish outlook for the week. Goldman Sachs' report, despite the higher Brent price target, highlights clear headwinds preventing a swift return to $80 or above. Key resistance levels for oil bulls include:

100-day SMA (near $76.46): Now acting as initial resistance.
200-day SMA ($77.62): Provides an additional obstacle.
$79.66/$80.00: This heavily contested zone may require a significant catalyst to break.

On the downside, watch:

$75.27: Pivotal support level.
$74.26 (55-day SMA): Secondary support.
Ascending Trendline ($72.93): Represents the lower boundary of the 2024 symmetrical triangle and should provide significant support