Negative statistics on the U.S. economy withhold oil prices from further growth

WTI oil prices failed to gain growth momentum on Monday, which was caused by an unexpected decision of OPEC+ countries to cut black gold production from May. Active bearish resistance to further growth is observed above the level of 81. Although oil traded without any clear tendency to continue rising or to start a correction in the last trading days of this week, now the market situation is more inclined towards a slight decline in prices.

Indicators of the U.S. economy state in March released over the past days certainly point to declining business activity, which could cause a fall in energy consumption and put pressure on oil prices.

The latest data on initial jobless claims only worsened the situation. Last week’s figure was significantly higher than forecast (228,000 instead of 200,000), and late March statistics were sharply revised downward to 246,000 new claims (the highest level since last August). The slowdown in new hiring and increased layoffs in the U.S. are evident.

Today, despite the lack of trading in the U.S. and European exchanges, market participants will closely monitor the release of the final statistics on the U.S. labor market for March. If these data confirm the downward trend in the U.S. economy, it will be significantly negative for the commodity market, and oil might fall among the first.

The technical indicators (RSI, Stochastic) on the WTI oil chart entered the overbought zone and formed a signal to the downward reversal. The first targets of the correction might be Monday’s local lows near the level of 79.

The following trading strategy may be offered:

Sell WTI oil for the current price. Take profit – 79. Stop loss – 81.5.

Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion.