WTI OIL – Recovery is likely to be limited as demand concerns continue to sour the sentiment

Bounce from Dec 7 low at $68.79 (the lowest since late June) seems to be running out of steam as recovery faces strong headwinds from initial Fibo resistance at $71.33 (23.6% of $79.57/$68.89) and unable to register clear break higher for the second consecutive day.

Oil prices remain pressured by persisting worries about global demand, as economic data from China (the biggest world’s oil importer) and other large economies are weak and signal that most of them is still well below full capacity.

Another concerns is oversupply, which may significantly increase on lower demand and despite production cuts imposed by OPEC+ members, led by Saudi Arabia and Russia.

Daily studies are still bearish, and recovery weighed by thick weekly Ichimoku cloud, which stands above the price.

Cloud base lays at $73.36 and marks the upper boundary of strong resistance zone between $72.91 and $73.36, consisting of Fibo 38.2% of $79.57/$68.79, falling 10DMA and weekly cloud base.

Increased risk of recovery stall is expected to persist as long as the price action stays capped by these barriers, with return below $70 level to further weaken near-term structure and open way for retest of a multi-month low at $68.79).

Only sustained break through $72.91/$73.36 zone would improve near-term outlook for possible stronger recovery.

Res: 71.79; 72.91; 73.36; 74.18
Sup: 70.34; 70.00; 69.48; 68.79