Crude Oil (USOIL) Nears $81 Amid Inflation Concerns & Tight Supply Outlook

Crude Oil (USOIL) prices dipped from their four-month zenith in Friday’s Asian session, trading down slightly, following a robust week where prices were poised for a more than 4% increase. Profit-taking and a strengthened US dollar, which responded to unexpectedly high US inflation figures and suggested a potentially more hawkish Federal Reserve stance, were factors in this pullback.

Despite this, Brent futures held strong, trading above $85 per barrel thanks to strong U.S. demand indicators and a constrained fuel market.

Inflation Data Strengthens Dollar, Affects Oil Prices

The US dollar has increased as a result of the February producer price index reading exceeding expectations, which raises the possibility that the Federal Reserve will maintain high-interest rates through 2024, creating a difficult environment for oil prices.

Supply Outlook Tightens on Geopolitical Tensions

With the White House reportedly purchasing more than 3 million barrels to replenish the Strategic Petroleum Reserve, crude is on track for a weekly gain of more than 4%.

Moreover, disruptions from Ukrainian strikes on Russian refineries and ongoing Middle Eastern conflicts signal a tightening supply outlook, with Brent and WTI contracts each nearing a 4% weekly increase.

Demand Forecasts Amid Economic Concerns

OPEC and the IEA have both projected strong oil demand for 2024 and 2025, with the IEA adjusting its demand outlook upwards amidst Middle Eastern supply disruptions. However, global economic slowdowns remain a concern, potentially impacting demand projections and the broader crude oil price forecast.

In this complex environment, USOIL’s slight decrease to around $81.07, juxtaposed with the potential for a bullish trend above the $80.65 pivot point, mirrors the broader market’s cautious optimism against a backdrop of inflation concerns and supply disruptions.

Crude Oil (USOIL) Price Forecast: Technical Outlook

On March 15, crude oil (USOIL) marginally increased by 0.05%, closing at $81.07. The asset is currently trading just above its pivot point at $80.65, suggesting potential for further gains. Resistance levels are identified at $82.41, $83.55, and $84.80, which could challenge upward movements.

On the downside, support is seen at $79.61, with additional levels at $78.63 and $77.31, offering floors to any dips. A breakout from a double-top pattern at $80.64 supports the Relative Strength Index (RSI) at 68, which suggests bullish momentum.

The 50-day Exponential Moving Average (EMA) at $79.07 further indicates an uptrend. Given these indicators, the overall technical outlook for USOIL remains bullish above $80.65, with a possibility of reversing if it drops below this critical point.