Crude Oil circles between key levels amidst market churn, WTI cycles around $74.50

• Middle East tensions, Red Sea risks continue to prop up Crude Oil.
• Growing supply keeps barrel bids weighed down.
• Investors are caught in the middle between supply chain fears and actual supply.

Crude Oil markets roiled once again on Tuesday, sending West Texas Intermediate (WTI) US Crude Oil prices for a lap around familiar price levels between $75.00 and $73.50.

Crude Oil investors continue to fear a shattering of regional and global supply lines as Houthis remain dedicated to attacking civilian cargo ships bound for the Suez Canal through the Red Sea and the Israel-Hamas conflict continues to risk dragging the Middle East into a protracted conflict that could hamper global Crude Oil trade, if not outright production.

US production of Crude Oil tipped into record highs in the tail-end of 2023, and according to the Energy Information Administration (EIA) on Tuesday, Texas’ Crude Oil output is getting aided by an overall increase in the density of its Crude Oil, meaning Texas is pumping oil out of the ground with a higher specific gravity than normal, meaning it can be converted into more light sweet crude than lighter-gravity oils from other pumping locations.

The US-UK naval coalition has launched a total of eight strikes against critical Houthi rebel locations and weapon emplacements throughout Yemen, but the continued military operations have yet to translate into economic stability as civilian cargo ships continue to avoid the Red Sea, keeping nervous Crude Oil markets on edge.

Despite geopolitical tensions keeping oil barrel prices on the high side, energy markets are having a hard time ignoring that global Crude Oil production threatens to swamp out global demand. The US is on pace to hit new production records in both 2024 and 2025 according to forward-looking estimates by the EIA, and the impending completion of the Canadian Trans Mountain pipeline will only push the numbers of available refined products even higher in the future.

WTI Technical Outlook

WTI Crude Oil tested into new highs for 2024 this week near $75.50, and hourly candles are on the high side of the 200-hour Simple Moving Average (SMA) as near-term action tilts into bullish territory on the charts. 

Daily candles show Crude Oil stuck on the low side of the 200-day SMA just below the $78.00 handle, and a slight bullish lean to prices see barrel bids getting snagged in a congestion zone between the 50-day and 200-day SMAs as Crude Oil prices drifts into a consolidation pattern, up nearly 10% from December’s swing low into $67.97.

WTI Hourly Chart

WTI Daily Chart