Will Oil Prices Bounce Back in 2024? WTI Crude Fundamental & Technical Analysis

Crude oil prices are trading at the lows the markets haven’t seen in months. The main things oil traders seem to be focusing on for 2024 are of course supply and demand.

On the supply side we have OPEC apparently deciding that they want to reduce output to maintain high prices but this has caused a rift in the organization. Angola left the oil producing club earlier this week.

But demand is attracting the most attention. The overall gloomy economic outlook for the developed economies, as well as the unclear prospects for the Chinese economy are causing many oil traders to be pesimistic about oil’s prospects.

Central banks are also in the spotlight for WTI Crude oil analysts, as the balance between growth and high inflation is being actively managed by the FED, BoE, BOJ and ECB in a quest to jumpstart economies.

00:00 Intro
00:10 WTI Crude oil outlook for 2024
08:40 WTI Crude oil technical chart analysis 2024
11:10 Recap

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With 2023 drawing to a close let’s take a look at what we can expect from oil prices in the New Year hello and welcome back to our Channel my name is Daniela and in today’s video we are going to be looking at oil prices to see what we can expect from a fundamental perspective from oil prices in 2024 but first of all as always please like this video comment

Subscribe and turn on your notifications and if you have any questions about trading or the market feel free to leave them in the comments Below in the section we’ll try and get back to you as quickly as possible so oil in 2023 it’s been a bit of a roller coaster ride not

Just for oil and commodities but markets in general we’ve seen quite a lot of move across the broad base of markets but heading into the end of the year especially this month of December we have seen a bit of a change of mentality in markets across the board now a lot of

This change of mental ality actually coming from the Central Bank meetings that we saw last week so the main driver of this change of mentality especially in oil prices as you’ll see in the charts in just a second we have uh turned and reversed higher over the last

Week was the fact that the Federal Reserve on Wednesday indicated a little bit of a dovish tilt that was unexpected by markets uh in fact how all but assured markets that rate cuts are coming in the New Year and that has led to repricing in expectations with markets now anticipating a cut to

Sometime between the first quarter and the beginning of the second quarter in 2024 and of course that impacts uh money markets and it has impacted as well sentiment in Commodities as we know oil is very volatile and very sensitive to Economic Development and of course expectations that Ray cut will come uh

In the US in the very short term has impacted expectations for demand for the commodity so uh that is one of the main drivers of this change of momentum that we’ll see in charts in just a second so the Federal Reserve being more dovish does essentially um allow Commodities

Like oil to have better growth expectations in the next few months because lower rates do free up costs for consumers and therefore uh do lead to growth or boosting growth in the economy that is the whole point of lowering rates after after a period of such elevated inflation and uh dare I say

Subpar growth that is not the case in the US we’ve seen growth in the third quarter extremely high in the US especially if we compare it to the likes of Europe but nonetheless expectations is that such high inflation for so long will have dampened uh um the economic

Situation of most households in Europe and the US and therefore lowering rates is the way to go at least that is what the FED seemed to um give away at the meeting since then we have seen some FC members coming out and trying to push back on some of the uh Market reactions

That we saw saying that rates are likely not to come as soon as expected but nonetheless markets have now taken the view that R cuts are coming sooner than expected um how many rain Cuts we see next year it’s going to be a key factor in determining uh asset prices and oil

Prices next year markets are pricing in 625 basis point Cuts in 2024 the FED Dot Plot sest yes around three so there is quite a bit of a um dispar realization of how many Cuts we may we may see um I think the fed’s prediction anywhere between three and

Four is more realistic at this point given the economic landscape of course that can change in my view if we do see six rate Cuts Like markets are predicting that essentially means that some of the worth uh forecast for the economy have come true and that isn’t

Necessarily good for oil either um so I would say uh rate cuts is good for oil but as long as they’re gradual and they’re not giving the impression that the economy is actually in a much worse shape than we were expecting that could weigh on oil prices as well so it is a

Very tricky balance of um trying to keep those expectations High whilst also lowering uh financing conditions in the economy so we saw that on Wednesday last week that started a big reversal a big change in mentality on the following day we actually saw um the iea uh so the

Energy uh Administration coming out and saying that their forecast for Oil demand had actually grown in 2024 that sparked another rally in oil prices which has continued pretty much to this week um and they were essentially saying that uh they are revised higher their growth expectations for 2024 the they

Are now at a growth of 1.1 million barrels per day so they added an extra 130,000 to their previous expectations and that of course I said boosted sentiment in oil markets that is quite a while away far away from What opec’s official expectations are roughly about half OPEC expecting growth in 2024 um

Demand growth to be around 2.2 million barrels per day so there is uh quite a um disjoint when there in expectations between the iea and the OPEC that is not uncommon uh the Ia has been a lot more conservative uh and a lot more bearish in terms of oil prices recently uh

Compared to OPEC but uh in general expectations for growth across the board seem to be higher in 2024 than in 2023 now what’s actually going to happen will’ll depend as I said of course on interest rates we dep depend on economic data now China is a big player in the uh

Demand uh situation so uh um forecast for China have been quite dire recently data has been quite underwhelming is there expectations for that to improve there is we have seen uh retail sales improving we’ve seen industrial production ction also Pro improving so expectations are a little bit better for

Economic forecast in China that of course uh feeds into a better Prospect for oil as well so China’s going to be a big uh determinant of uh oil prices in 2024 as I said rates as well and how expectations about rates and the economy

Go um so that is going to be very key going forward now another thing to take into account of course the performance of the US dollar we have seen the US dollar drop recently on the back of that more dovish bed that has aided oil prices higher so the performance of the

Dollar is something to take an eye out uh something to consider in the new year as well um of course a week a dollar makes it cheaper for foreign investors as well so it could improve the demand prospects um for the commodity something

To take an ey to keep an eye out on as well is the supply side um so we know throughout 2023 we’ve seen Supply Cuts coming from some of the big producers Saudi Arabia and Russia being two of the most important ones they are forecasted to expect to they are forecasted to

Continue in 2024 do we see an increase in those production Cuts do we see that change that will be a fact to consider as well I think for now we’re not really expecting it to change that much but we could see some of that uh in the next

Few months also Supply shocks um external geopolitical factors those are very hard to predict but uh those of course uh could be a bullish signal for oil prices in the in the next if something were to happen we have seen um an increase in ship attacks in the Red

Sea recently no oil tankers have been affected yet but if that situation escalates we could see oil prices picking up on the back of that that is more in the immediate future the short term but uh for 2024 I think most of the forecasts are expecting to see average

Prices around $80 per barrel I think roughly where we are right now there isn’t expected to be too much volatility it’s just the case of that playoff between demand and Supply how quickly demand can recover how will economies perform uh as central banks start to cut

Rates and will we see growth pick up um are they going to have to cut more than expected because growth is going to perform worse all of those factors are going to be key for oil in the short term it looks like it’s a bullish uh

Pattern it looks like the path of lease resistance is higher on the back mostly of that D Fred weaker oil sorry weaker dollar um and expectations of more growth but of course that can change in the coming months there is a lot of economic data that comes out in Europe

The US China all that affecting oil prices as well so the forecast for now pretty good just to see an average performance next year in terms of the technicals if we use uh West Texas intermediate so us crude as our Benchmark you can see here this turning

Momentum starting last week as I said this was on the back of that Federal Reserve meeting on the 13th here the revision upward Revision in growth forecast on the following in day really just culminating in this uh bullish reversal that has been playing out quite nicely we did see a little bit of

Indecision here creeping in on Wednesday so yesterday uh seeing a little bit of a short-term top there but nonetheless as I said the short-term expectations are for this bullish bias to continue the RSI is now just hovering below that 50 line so finding a little bit of

Resistance here uh but if we do cross above 50 and we do see those higher highs and higher lows continue um as the trading days go on then the prospects as I said are pretty good there in the short term we do have some resistance up

Ahead we are still trading below the 250 and 100 day simple moving averages so expect to see some resistance in the longer term we could as I said struggle to actually capitalize on those gains the average performance is expected to be roughly around $80 per barrel to see

A little bit of sideways move um along there and potentially some dips and and Peaks above that but we do have a while to go there and as you know for for WTI $80 or 80.6 and 82.5 is a key um resistance uh Confluence area that’s

Been very important in the past so if we do manage to get there it’s likely that we do see some consolidation some struggle potentially some sell backs uh some pullbacks and sell-offs coming from there as uh investors start to question the sustainability of further moves

Before we get to that area though as I said we’ve got some moving averages to tackle so the momentum has started to fizzle out a little bit I wouldn’t be surprised if around this area we see as they say some somewhat sideways consolidation potentially a little bit

Of a pullback we are coming into the holiday period we do see reduced liquidity um so that can sometimes leads to exasperated moves if we see any news coming out on those days we could see quite a bit of volatility over the holiday period there are a few things

Out there that could affect it um but for now it looks like we are trading uh what is fundament Al quite a sound area here just around that 74 Mark for WTI shortterm bias to the upside but likely to be some further resistance from there that is it for

Today’s analysis on us crude thank you so much for watching and don’t forget to subscribe to our Channel