Crude Takes Pause After Superb December

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Updated: Dec 31, 2019, 11:07 UTC

Crude oil has posted four winning weeks in a row, but the rally has taken a rest this week. Currently, crude is trading slightly below the $62 level.

Crude is trading sideways for a third successive day. Currently, West Texas Intermediate futures are trading at $61.76, up $0.07 or 0.11%. Brent crude oil futures are trading at $66.86, down $0.22 or 0.33%. Crude prices have posted gains for four successive weeks and have jumped an impressive 11.5% in December. With the exception of January, December has been crude’s best performing month.

Investors Await EIA Inventory Report

Crude prices are sensitive to the Energy Information Administration (EIA) weekly crude inventory report. Due to the holidays, last week’s report came out on Friday, and investors will have to wait until the end of the week for the next release. Last week’s reading caught analysts by surprise, as the drawdown of 5.1 million barrels was much higher than the estimate of -1.1 million. This marked the largest draw of crude since September and has lifted crude prices in Monday trade. Over the past several months, EIA reports had pointed to a large oversupply of crude, but that trend has shifted lately, with three declines in the past four weeks. If this week’s EIA report also indicates a decline, traders can expect crude prices to move upwards.

Chicago PMI Climbs to 4-Month High

The final week of the year started positively. Chicago PMI, an important business barometer, beat expectations with a reading of 48.9 in December. This was up from 46.3 in the previous release and marked a 4-month high. Although this reading still shows contraction, the index is moving in the right direction. Later on Tuesday, CB Consumer Confidence is projected to accelerate to 128.0 in December, compared to 125.5 in November. On Friday, Manufacturing PMI is also expected to accelerate, with an estimate of 49.0 December, up from 48.1 pts in November.

Technical Analysis

On the upside, crude may find it difficult to move higher, as there are some nearby resistance barriers to contend with. There is a major Fibonacci level at 62.05, followed by resistance at 62.25. Above there is resistance at 63.25. On the downside, the round number of 61.00 is providing support, followed by 59.75.

WTI/USD 1-Day Chart

About the Author

Kenny Fisherauthor

Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.