Crude holds support

19 дек. 2023 г.

Last Wednesday, front-month WTI briefly dipped below $68 to hit its lowest level since June this year. This meant that crude had slipped deeper into a band of support marked by $67.50 at the low end. This has held ever since, and crude has managed to rally off here, although not in the spectacular fashion that we saw in equities, precious metals and bonds following the dovish Federal Reserve monetary policy announcement. In fact, a look at the chart tells us that oil’s gains have been hard fought so far, which makes one wonder if they could be undone quite quickly. But oil was very oversold, and bulls should be heartened knowing that the MACDs on the daily chart and all lower timeframes are turning up quite neatly, building on the positive divergences which have developed since the beginning of this month. As you can also see from the daily chart above, prices have managed to break above the resistance line of the down-trending channel.

Fundamentally, supply continues to outstrip demand, and this dynamic is forecast to continue into the new year. But tankers are now avoiding the Red Sea due to an increase in Houthi drone and missile attacks from Yemen. That may also offer some support.