Crude Oil at a Crossroads: Traders Eye US Data, China Rebound, and Key Technical Levels 

This week, high-impact economic events are set to influence market sentiment, including US Unemployment Claims, Crude Oil Inventories, and the ISM Manufacturing PMI. 

Crude oil markets remain in focus as prices attempt to rebound from recent lows, supported by improving technical indicators and cautious optimism around China’s recovery. Traders are closely monitoring these economic releases for further clarity on oil’s trajectory, particularly as US stockpile data later today could offer fresh insights into supply-demand dynamics. 

Thursday 15:30 (GMT+2) – USA: Unemployment Claims (USD)

Thursday 18:00 (GMT+2) – USA: Crude Oil Inventories (USD)

Friday 17:00 (GMT+2) – USA: ISM Manufacturing PMI (USD)

Since July 5, crude oil prices have steadily declined from a peak of $84.24 per barrel. The downward trend began with the formation of a Shooting Star candlestick pattern, signaling weakening buyer control. The decline was further reinforced by a technical reversal pattern known as a failure swing, accompanied by a “Death Cross” double crossover, which amplified the bearish momentum.

However, for the past two months, crude oil has found strong support near the $66.50 level, paving the way for a reversal. Notably, the trough at $68.30 held above the previous low and eventually surpassed the swing high at $70.89, forming a bullish failure swing. Adding to this upward shift, a “Golden Cross” emerged as the 20-period Exponential Moving Average (EMA) crossed above the 50-period EMA, signaling strengthened upward momentum.

Key momentum indicators also support this recovery. The Momentum Oscillator remains above 100, indicating continued upside pressure, while the Relative Strength Index (RSI) is holding above its 50 baseline, reflecting sustained buying activity.

Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:

72.49: The initial resistance level is set at 72.49, which mirrors the 161.8% Fibonacci Extension drawn from the high point, 70.89, to the low point, 68.30.

75.08: The second price target is identified at 75.08, representing the 261.8% Fibonacci Extension drawn from the high point, 70.89, to the low point, 68.30.

78.27: The third price objective is determined at 78.27, which corresponds with the daily high from October 8.

79.27: An additional price target is established at 79.27, representing the 423.6% Fibonacci Extension drawn from the high point, 70.89, to the low point, 68.30.

Should the bears take market control, traders may consider the four potential support levels listed below:

70.89: The initial support level is seen at 70.89, corresponding to the swing high formed on December 13.

69.59: The second support level is estimated at 69.59, representing the weekly Pivot Point, PP, calculated using the standard methodology.

68.30: The third support level is identified at 68.30, reflecting the swing low marked on December 20.

66.45: An additional downside target is 66.45, mirroring the daily low from November 18.

Oil prices edged higher as trading resumed for 2025, supported by cautious optimism around China’s economic recovery and fuel demand following growth-focused pledges. Brent crude rose to $75.04 per barrel, while WTI climbed to $71.94.

China’s manufacturing data showed modest gains, with policy stimulus beginning to impact some sectors despite trade concerns linked to the incoming US administration. Analysts highlighted that geopolitical risks and US economic signals, including the upcoming ISM manufacturing data, could shape crude’s next move.

Investors are also closely watching US oil stockpile data, set to be released this afternoon. The report is expected to shed light on crude’s near-term trajectory, with predictions suggesting a decline in crude and distillate inventories but a rise in gasoline stocks.

Meanwhile, US oil demand surged to post-pandemic highs in October, while production reached a record 13.46 million barrels per day. However, a Reuters poll suggests oil prices may remain constrained around $70 in 2025 due to weak Chinese demand and rising global supplies despite OPEC+ support.

This week’s high-impact economic events and critical market data will provide valuable insights into the trajectory of crude oil prices and broader market sentiment. With technical indicators showing signs of recovery in oil markets and US stockpile data expected to shed light on supply-demand dynamics, traders remain focused on key resistance and support levels. Combined with updates on China’s recovery and US economic signals, these developments will be pivotal in shaping short-term market trends.