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Navigating the 2024 Oil Market

Trends, Predictions, and Technical Analysis

Navigating the 2024 Oil Market: Trends, Predictions, and Technical Analysis

Preface:

As we approach 2024, the oil market remains a critical component of the global economy, characterized by its dynamic and multifaceted nature. This document combines an overview of the market's outlook with a detailed technical analysis, providing insights into the factors influencing oil prices and the potential future movements in this volatile market.

Global Outlook and Price Predictions:

  • International Oil Prices Forecast: For 2024, international oil prices are anticipated to stay around $80 a barrel, influenced by weak global economic growth and geopolitical tensions. Doubts persist regarding OPEC+'s ability to sustain supply cuts.
  • U.S. Crude Oil Forecast: U.S. crude is predicted to average around $78.84, with subdued demand growth as a significant factor.
  • Major Financial Institutions' Forecasts: Various financial institutions present mixed forecasts. Goldman Sachs predicts a range of $70-$90 per barrel, while Citigroup anticipates an average price of $75, factoring in slower demand growth and higher U.S. output. Other major banks predict Brent prices between $83 and $90 per barrel.

Technical Analysis of the Oil Market:

  • Long-Term Price Action: Reflecting on the long-term price action, oil futures dramatically dropped to negative in April 2020. Prices rose steadily to a high of $129.44 in early March 2022, followed by a downward trend stabilizing at around 50% of the retracement level.
  • Short-Term Trends and Patterns: The short-term trend has been predominantly downward to sideways. A Reverse Head and Shoulders pattern indicates a potential bullish turn, with key resistance at $82 and support in the $65-$68 range.
  • Volume-Weighted Average Price (VWAP) and Point of Control (POC): The VWAP stands at $73.52, with current oil prices trading above this level. The POC is at $71.94, suggesting that the current price is above the most traded price level.
  • Forecasting Future Movements: The document highlights the importance of monitoring price action closely, especially given the current trend which indicates a shift from a downward to a sideways movement, with a higher probability for an upward trend.

Conclusion:

The 2024 oil market presents a blend of bearish and bullish signals. While the general trend appears prices expected to be around $80 a barrel, the potential for volatility and price hikes remains high due to factors like increased demand from Asia, geopolitical risks, and OPEC+'s production decisions. The technical analysis suggests that there is a potential for a bullish trend in the short term, with oil prices possibly reaching the range of $80 to $85. Stakeholders should thus stay vigilant, keeping an eye on both global trends and technical indicators to navigate the complex landscape of the oil market.

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