Crude Oil Market Analysis:

Oil prices edged higher in early Asian trade on Friday, October 18th, with WTI crude currently trading around $70.81 per barrel.  Oil prices have stabilized somewhat after four consecutive days of decline, with Brent crude finding support near $70.7 per barrel.  A surprise drawdown in US crude inventories reported by the Energy Information Administration (EIA) provided some support, but concerns about weakening demand continue to weigh on prices, putting oil on track for its biggest weekly loss in over a month, down roughly 6%.  Earlier this week, both OPEC and the International Energy Agency (IEA) lowered their forecasts for global oil demand growth in 2024 and 2025.  Furthermore, concerns about potential supply disruptions from an Israeli retaliatory attack on Iran have eased.

Brent crude futures settled at $74.74 a barrel, up $0.03 or 0.4%. US crude futures settled at $70.94 a barrel, up $0.02 or 0.44%.

The EIA reported on Thursday that US crude inventories fell by 2.2 million barrels for the week ended October 11th, defying analysts' expectations of a 1.8 million barrel build.

Market participants will continue to monitor geopolitical developments in the Middle East. While uncertainty remains about how the conflict will unfold, concerns that an Israeli retaliatory strike against Iran for its October 1st missile attack could disrupt oil supplies are providing some support to prices.  Investors will also be watching for US oil rig count data, building permits, and housing starts figures, as well as any speeches from Federal Reserve officials.

Crude Oil Technical Analysis:

Daily Chart:The daily chart shows that the downtrend line resistance has shifted lower to the $72.0-$72.30 area.  A strategy of selling on rallies towards this resistance zone is recommended, with the downside target being the lower boundary of the triangle pattern around $68.0-$67.0.  The focus remains on range-bound trading within this triangle, with a breakout potentially leading to a continuation of the prevailing trend.  Any rebound before a decisive break above $72 should be viewed as a selling opportunity.

4-Hour Chart:The 4-hour chart shows that oil prices have entered a wide-ranging consolidation phase, forming a triangle pattern.  Prices are currently retreating towards the lower boundary of this triangle.  The recent rebound from the lows lacked sustained momentum, suggesting that range-bound trading is likely to persist in the near term.

Overall:The short-term outlook for oil favors selling on rallies with selective buying on dips.

Key Resistance Levels: $72.0 - $72.5

Key Support Levels: $69.5 - $69.0

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