Oil Prices Rise on Technical Breakout and Stimulus Hopes
Light crude oil futures advanced on Thursday, driven by technical momentum and optimism over economic stimulus in China. Prices climbed after Monday’s bullish crossover of the 50-day moving average, establishing support at $69.11. Traders are targeting resistance near $71.10, with a breakout potentially accelerating gains toward $72.43.
At 11:32 GMT, Light Crude Oil futures are trading $70.52, up $0.42 or +0.60%.
Technical Levels Point to Further Upside
The 50-day moving average at $69.11, now a key support level, coincides with the long-term 61.8% retracement at $68.69. Resistance sits at $71.10, aligning with the long-term 50% retracement. A break above this level could drive prices to the 200-day moving average at $72.43, marking a shift to a bullish long-term trend.
China’s Fiscal Stimulus Fuels Market Optimism
Investor sentiment received an additional boost from reports of new fiscal stimulus measures in China. Chinese authorities plan to issue 3 trillion yuan ($411 billion) in special treasury bonds next year, aimed at revitalizing economic growth. As the largest importer of crude oil, China’s economic health significantly influences global demand forecasts. Traders are betting on increased fossil fuel consumption as economic activity recovers, providing another layer of support for crude prices.
U.S. Inventory Draws Add to Bullish Sentiment
Oil prices found further support from U.S. inventory data. The American Petroleum Institute (API) reported a 3.2-million-barrel decline in crude stocks last week.
Market participants await confirmation from the official Energy Information Administration (EIA) report, expected Friday, which could reinforce bullish sentiment if it aligns with or exceeds forecasts. Analysts anticipate a 1.9-million-barrel draw in crude inventories, alongside declines in gasoline and distillate stocks.
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Crude oil markets are poised for further gains if resistance at $71.10 is breached, paving the way for a test of $72.43. Support from Chinese stimulus measures and declining U.S. inventories adds a fundamental backdrop to the technical strength observed this week.
Traders should watch for confirmation from the EIA’s report, as stronger-than-expected draws could fuel additional upside. The overall outlook remains bullish, with key price levels and stimulus policies driving market direction in the short term.
