- Crude Oil markets are betting on seasonal demand increases to offset supply builds.
- Geopolitical headlines from the Middle East continue to put a floor under barrel bids.
- A split in demand growth projections has Crude Oil markets facing diverging outlooks.
West Texas Intermediate (WTI) US Crude Oil extended a near-term rebound to claw back the $78.00 handle on Friday, driving back into a notable technical zone heading into Friday’s closing bell.
The Gaza conflict between Israel and Palestinian Hamas still hasn’t seen a resolution or significant progress on a hotly-negotiated ceasefire, keeping energy markets nervous about potential spillover into neighboring Crude Oil production-heavy nations like Iran. Houthi rebels in Yemen continue to target civilian cargo ships in the Red Sea bound for the Suez Canal, helping to keep fears of potential supply disruptions elevated.
The Organization of the Petroleum Exporting Countries (OPEC) firmly believes that global Crude Oil demand will continue to grow for the next two decades, but that perspective is being challenged by the International Energy Agency, which is forecasting that global demand will flag in the coming months. The IEA’s forecasts expect global Crude Oil demand growth to slow to 1.22 million barrels per day, while OPEC expects a long-term growth increase of over double that figure.
WTI US Crude Oil traders shrugged off the IEA’s warning flashed this week, as well as another surprise buildup in US Crude Oil barrel counts. Investors predominantly focused on geopolitical headlines this week, as well as a larger-than-expected drawdown in refined and downstream oil products.
WTI technical levels
WTI saw its highest bids in nearly three weeks on Friday, testing into $78.40 before wrapping up the week’s trading near $78.20 at Friday’s closing bell. Near-term momentum is healthily bullish with the 200-hour Simple Moving Average (SMA) climbing into $76.10 and bolstering intraday technical patterns from below.
Daily candlesticks see WTI poised for a firm breakout to the high side of the 200-day SMA near $77.45, but bulls will need to stage a decidedly firm break of January’s peak of $79.20 before taking a run at the $80.00 handle.
WTI hourly chart
WTI daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.