Crises around the world have quickened since publishing Part 1 on Jan. 22, which included many details about the petroleum market that remain applicable today. Despite an uptick in geopolitical chaos, supply chain disruptions, and apocalyptic war rhetoric, the price for a barrel of Brent Crude and United States WTI crude oil have remained relatively stable with only a slight increase and no major spikes. I will dive into the price action with a technical analysis of charts today, but let’s first discuss U.S. domestic production and export data. Here is an excerpt from January:

“Numerous factors determine the price of oil for U.S. consumers, and the current confluence of world events along with conflicting analyst views are driving the price action. Influences include but are not limited to supply, demand, inventory, supply chains, weather, geopolitics, monetary policy, and the state of the U.S. economy. The good news is that the U.S. is producing more oil right now “than any country in history.” – TraderStef

If the U.S. has achieved record global oil production, why are prices at your local gas station not falling significantly and instead rising once again? As of Mar. 26, the national average for a gallon of regular gasoline is $3.53 according to GasBuddy. Pricing on the U.S. West Coast is typically much higher than the national average.

Gas prices rise in California – Action News Now, Mar. 25

 

As of 4Q23, the U.S. pumped out more crude oil over the last six years than any other nation since records started being kept. Total U.S. production including condensate averaged 12.9 million barrels per day (b/d) in 2023 and obliterated the previous global and U.S. record set at 12.3 million b/d in 2019. A monthly record high occurred in Dec. 2023 at 13.3 million b/d and is unlikely to be surpassed anytime soon by any other country. Data for 1Q24 is scheduled for release at the end of this month. The U.S., Russia, and Saudi Arabia combined accounted for 40% (32.8 million b/d) of global oil production last year while Canada, China, and Iraq were the next three largest producers with a combined 13.1 million b/d.

 

 

 

Due to the failure of Bidenomics, prices are not dirt cheap at your local gas station because the U.S. is shipping that record oil production to the rest of the world, and our U.S. Strategic Petroleum Reserve (SPR) remains at a dangerously low level after Biden drained it to lower prices.

 

 

In 2023, U.S. crude oil exports hit a record that averaged 4.1 million b/d. The top destinations for those exports were Europe and Asia. Europe topped that list due to the West’s Green New Deal energy policies and sanctions imposed on Russia with NATO’s proxy war and Ukraine. Exports to Europe averaged 1.8 million b/d, slightly more than exports to Asia and Oceania at 1.7 million b/d. Exports to China were the second highest at around 452,000 b/d and double the volume of 2022. China’s oil imports were the highest since 2005 and included much more from Russia as their new strategic and trading partner all thanks to war dogs running the Biden administration.

 

 

 

 

In addition to exporting our liquid gold, there is an oil tanker shortage emerging due to the Houthis in Yemen who are disrupting the global supply chain of shipping through the Red Sea and Suez Canal, and they’re threatening Saudi Arabia’s oil infrastructure due to the U.S. military attempting to quell the attacks on commercial shipping. We then have covert operations via Ukraine that intensified attacks by drones and missiles against oil refineries and energy facilities deep within Russian territory. There are also seasonal demand factors leading into the summer months, but IMHO it’s too early in the season for that variable. Lastly, with the global economy slowing down into recession, the demand for oil could decrease and keep prices steady unless a major development with the wars in Israel and Ukraine morph into a WW3 worst-case scenario.

WTI Crude weekly chart as of Mar. 26, 2024 at 6pm ET…

 

Excerpt from the Jan. 18, 2024 weekly chart analysis…

“There is no significant pattern, and the current consolidation phase has been tight within a $3 range since Dec. 2023. Resistance is at the 50% Fibonacci level, and support rests at the red trendline. The price action remains below the 50 Exponential Moving Average (EMA), and the DMI-ADX is unremarkable while in a negative trend. The chart is neutral until the 50 EMA is breached in a bullish rally through the low to mid-$80s and the topside black trendline is taken out. The price turns bearish if it breaks below the red trendline at around $70 and challenges the spring 2023 low at $64.70.”

WTI closed at $73.39 for the week of Jan. 15. It printed a bearish Gravestone Doji last week with an $80.65 open, $80.33 low, $83.09 high, and it closed at $80.74. So far this week, the price action printed an $80.62 low, $82.43 high, and it closed today at $81.19. The rally since mid-Dec. lifted the price above the 50 EMA, 61.8% Fibonacci level, and it has been challenging overhead resistance since last week at the trendline drawn down from the Mar. 2022 high. A potential pattern developing is a bearish Head & Shoulders (red lines) with a Neckline at around $70, but the right shoulder needs a price correction that reaches down to the Neckline for a confirmation. The StochRSI is in overbought territory and could remain there for a while if the price rallies through resistance at the topside trendline. Short of a sudden change in fundamentals or news-driven factors, a seasonal rally before summer travel demand does not usually begin until sometime in May through June. The chart is neutral with bullish potential.

Brent Crude weekly chart as of Mar. 26, 2024 at 6pm ET…

 

Excerpt from the Jan. 18, 2024 weekly chart analysis…

“Except for price points, the view on Brent Crude is nearly identical to WTI. There is no pattern to mention, and the price has been consolidating within a tight $6 range since Dec. 2023. Resistance is just below the 50% Fibonacci level at $81.76, and support is at the red trendline. The price action remains below the 50 Exponential Moving Average (EMA), and the DMI-ADX is unremarkable while in a negative trend. The chart is neutral unless the 50 EMA and topside black trendline are breached in a bullish rally through the low $80s. The price turns bearish if it breaks below the red trendline at around $73 and challenges the spring 2023 low at $70.”

Brent closed at $78.65 for the week of Jan. 15. Once again, the view of Brent Crude is nearly identical to WTI except the price action has peeked its head above resistance at the topside trendline drawn down from the Mar. 2022 high. It printed a bearish Gravestone Doji last week with an $85.35 open, $85.08 low, $87.66 high, and it closed at $85.52. So far this week, the price action printed an $84.96 low, $86.47 high, and it closed today at $85.24. Note the potential Head & Shoulders pattern developing with a Neckline at around $74. The StochRSI is in overbought territory and could remain there for a while if the price continues to rally. The chart is neutral with bullish potential.

Roughest Neck Around – Corb Lund @CorbLund and the Hurtin’ Albertans

 

Plan Your Trade, Trade Your Plan

TraderStef on Twitter / Website: TraderStef.com

Headline Collage Art by TraderStef