WTI crude oil prices hovered around $71.81 per barrel on Wednesday, buoyed by fresh data revealing continued growth in China’s manufacturing sector.

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The world’s largest oil importer saw factory output increase for the third consecutive month, albeit at a slower pace, signaling that recent economic stimulus measures are aiding recovery. Despite this, trading remained thin due to the holiday season, and uncertainty over global oil demand lingered.

While crude oil is set for a minor annual decline, the narrow trading range of recent months highlights broader market caution. Traders are eyeing potential catalysts, including changes in U.S. oil policies under the incoming Trump administration, geopolitical developments, and the possibility of a global supply glut.

Technical Analysis: Key Levels to Watch for WTI

On the 4-hour chart, WTI crude oil has broken out of a symmetrical triangle pattern, hinting at further bullish momentum. Immediate resistance is identified at $72.00, with subsequent targets at $72.80 and $73.40. A decisive close above these levels could solidify the upward trend.

Conversely, the commodity’s downside remains cushioned by key support levels at $71.10, $70.30, and $69.40. The 50-day EMA at $70.32 provides an additional safety net, bolstering near-term stability.

Momentum indicators reveal a mixed picture. The RSI at 67.38 underscores strong bullish sentiment but signals a move toward overbought conditions. Traders are advised to closely monitor price action near the $72.00 mark, as a breakout or rejection at this level will shape short-term trends.

2025 Uncertainty Clouds Oil Market Prospects

The broader oil market outlook for 2025 remains complex, with factors such as geopolitical tensions, potential U.S. policy shifts, and inflationary pressures influencing sentiment. The Federal Reserve’s stance on interest rates and its impact on the dollar’s strength will also play a pivotal role in shaping crude oil demand.

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Moreover, concerns over a supply glut persist as producers weigh the need for output adjustments to balance supply with demand. The oil market’s trajectory in early 2025 will hinge on these variables, making data releases and policy signals critical for traders.

Key Insights:

• Resistance Levels: Immediate barriers at $72.00, $72.80, and $73.40 could test the strength of bullish momentum.

• Support Zones: Key supports are located at $71.10, $70.30, and $69.40, underpinned by the 50-day EMA at $70.32.

• Momentum Indicators: RSI at 67.38 reflects bullish sentiment but suggests potential overbought conditions.

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.

His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.

His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.