WTI Crude Oil Tumbles Below $70, Eyes on Potential Support

In recent trading sessions, WTI crude oil has experienced a significant decline, piercing through the $70 mark, a level that hadn't been breached since June. Analysts predict that this could herald more short-term losses according to technical indicators. However, the $63 to $67 range is forecasted to offer strong support and possibly halt the downward movement.

The Factors Behind the Plunge

The sharp sell-off in oil prices has been attributed to multiple elements. A leading cause is the perceived reduction in demand, particularly noticeable in the fuel sector. This has been partly confirmed by reports from the EIA, which indicated a rise in US gasoline stocks that surpassed expectations. Contributing to the negative outlook in oil markets are ongoing concerns over the state of China's economy, exacerbated by Moody's revision of China's credit rating outlook from stable to negative. Furthermore, doubts surrounding OPEC+'s strategy to implement production cuts are adding to the bearish stance among investors.

Technical Analysis and Support Levels

From a technical analysis standpoint, WTI's decisive break below the $72.65 support level suggests a continuation of the downtrend from the previous high of $95.50. The bearish trend is expected to persist as long as the price remains under the $74.23 resistance level. Analysts project a further drop, potentially reaching the 61.8% Fibonacci retracement level at $68.38.

However, a considerable cushion is anticipated in the $63.67 to $66.94 support zone, which could interrupt the bearish trend and trigger a recovery. This forecast is based on the completion of a five-wave pattern starting from the $95.50 peak. Even if prices were to fall through the $63.67 threshold, the 100% Fibonacci extension at $61.35 is poised to act as a fundamental barrier against further significant declines in WTI oil prices.

WTI, oil, support