US WTI Crude Oil Retreats Back To Mid-$73.00 Per Barrel Amid Tight Supply And Easing Banking Fears

• US WTI Crude Oil futures rebound to snap a three-day winning streak, moving below mid-$73.00s per barrel
• Renewed USD buying as fears of a banking crisis eases undermines crude oil prices, limits further upside move
• Disruptions in Kurdish crude shipments and a potentially significant draw in U.S. inventories point to tighter supply in the near term.

US WTI Crude oil futures slipped below mid-$73.00s per barrel during the mid-Asian session to reverse parts of their earlier gains. Price has snapped a three-day winning streak buoyed by concerns of tightening supply following Iraq's decision to halt some exports from Kurdistan and market sentiment improvement following fears of the banking crisis easing.

As per press time, US WTI crude oil futures was down 0.22%/16 cents for the day to trade at $73.76 per barrel, while its counterpart Brent crude futures were down 0.23%/18 cents to trade at $80.39 per barrel amid renewed U.S. Dollar demand and a fresh leg-up in the treasury bond yields.

Supply concerns as a result of Iraq's decision earlier this week to halt exports of about 450,000 barrels per day - roughly 0.5% of daily global supply - from the Kurdistan region through Turkey after an arbitration showed that Baghdad's approval was needed to ship the oil pushed crude oil prices higher this week in the expense of a weaker U.S. dollar. Additionally, relief in financial markets worries about the banking sector turmoil was another factor that boosted investors' risk appetite." 

Apart from this, market acceptance that the U.S. Federal Reserve will keep a cautious stance in raising interest rates because of banking stress also increased hopes for a more robust global economy and oil demand, which helped push crude oil prices higher this week. Last week, a drawdown in U.S. crude oil inventories also lent support to crude oil prices. U.S. crude oil inventories fell by about 6.1 million barrels in the week ended March 24, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by about 5.9 million barrels, while distillate stocks rose by about 550,000.

That said, despite the positive factors supporting crude oil prices, the current price action points to some near-term weakness in oil demand amid the ongoing union strikes in France and Germany, which has grounded economic activity in the two countries to a halt this week. Apart from this, rebounding treasury bond yields as fears of a crisis in the banking sector were assuaged, and investors assessed what could be on the horizon for the U.S. economy and Federal Reserve policy decisions. This triggered some U.S. Dollar buying capping crude oil prices against further upside moves.

As we advance, Oil markets are awaiting business activity data from China this week to gauge the state of an economic recovery in the world's largest crude importer. But analyst estimates see growth cooling in March from the prior month as a post-COVID economic bounce runs out of steam. Despite worsening economic conditions, China is still struggling with weak domestic and overseas demand.

Technical Outlook: Four-Hours US WTI Crude Oil Futures Price Chart

From a technical standstill, the US WTI Crude oil futures price slipped lower below mid-$73.00s per barrel following the price's inability to find acceptance above the technically strong 200 EMA (yellow) at the $73.998 level (overhead resistance). If sellers manage to reinforce the bearish momentum, we could see a fall toward the demand zone ranging from $72.229 - 72.480 levels. A convincing break below this barricade will pave the way for further downside. In the worst cases, the bearish trajectory could move to tap the 20 (blue) and 50 (red) Exponential Moving Averages at 71.992 and 71.092 levels, respectively.

However, such a move seems unlikely amid the current bullish sentiment surrounding crude oil prices. Furthermore, all the technical Oscillators are holding bullish dip territory, indicating bullish price action this week. The 20 (blue) and 50 (red) Exponential Moving Averages crossover at the $70.442 level adds credence to the bullish bias.

If dip-buyers and technical traders jump in and trigger a bullish turnaround, the price will face initial resistance at the 200 EMA (yellow) level at $73.998. A four-hour candlestick close above this level could negate any near-term bearish outlook. On further strength, the focus shifts toward retesting the key resistance level plotted by an ascending trendline extending from the mid-March 2023 swing high. If buyers pierce above this ceiling, the bullish trajectory could be extended toward retesting the January 2022 lows around the $74.30 resistance level.