Oil Prices Rise as Supply Risks Return
U.S. benchmark WTI and international benchmark Brent crude oil futures are trading higher Thursday in an attempt to add to yesterday’s gains. After starting the week with a steep decline on Monday, prices have stabilized the past three days as investors weighed the impact of persistent geopolitical tensions against fresh evidence of higher output.
At 20:15 GMT, December WTI crude oil futures are trading at $89.06, up $2.53 or +2.53% and January Brent crude oil futures are at $95.82, up $3.06 or +3.30%.
Attacks and Shipping Disruptions Lift War Premium
According to Reuters, WTI and Brent crude oil prices climbed over $2.00 a barrel earlier in the session on Thursday as traders put back a little of the war premium in reaction to an escalation of attacks on Saudi energy infrastructure and reports of shipping disruptions through the Strait of Hormuz. The price action reflects new concerns over global supplies. Additionally, attacks on Russian infrastructure by Ukraine are also adding upward price pressure.
President Trump may have fanned the bullish flames also when he posted on social media that Washington did not need a deal with Iran.
“Those days have long since passed. We’ve got their money, Hundreds of Billions of Dollars, and we’ve got their Strait!” he wrote.
Higher OPEC+ Output and U.S. Inventories
Early in the session, prices were pressured by OPEC+ data that showed crude production rose in October. Increased Saudi Arabian output despite shipping disruptions in the Middle East was to blame. Later in the session, traders shrugged off the U.S. Energy Information Administration’s weekly inventories report that showed a rise in U.S. crude, gasoline and distillates.
Brent Oil Price Forecast
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See all Brent Oil forecastsDaily December WTI Crude Oil Futures Technical Analysis
December WTI crude oil futures are in a position to close higher for a second session. The main trend is down, but the minor trend is up. This is generating some upside momentum. The main trend will change to up on a trade through $104.99. A trade through $83.88 will signal a resumption of the downtrend.
The minor trend turned up on Thursday when buyers traded through yesterday’s high at $88.74. A trade through today’s low at $85.13 will change the minor trend back to down.
The long-term retracement zone support is $88.00 to $83.98. On Tuesday, the market broke the support, but after reaching $83.88, it turned around quickly, eventually forming a 2-day bottom.
The market is now trading inside the intermediate retracement zone at $91.09 to $87.80. The support cluster at $88.00 to $87.80 will likely determine the near-term direction.
The short-term range is $104.99 to $83.88. Its retracement zone at $94.44 to $96.93 is the next major upside target area.
Finally, the 50-day moving average at $92.55 is resistance and a potential trigger point for an upside breakout. The 200-day moving average at $79.00 is major support and a long-term trend indicator.
Daily January Brent Crude Oil Futures Technical Analysis
January Brent crude oil futures are trading close to their session high late Thursday in a counter-trend rally fueled by a midpoint breakout to the upside.
The main trend is down according to the daily swing chart. A trade through the new main bottom at $89.16 will signal a resumption of the downtrend. The main trend will change to up on a trade through $114.29.
The main range is $70.96 to $114.29. Its retracement zone support is $92.63 to $87.51. Tuesday’s main bottom at $89.16 was created inside this zone. A rally through the upper or 50% level at $92.63 likely fueled the breakout to the upside.
The short-term range is $114.29 to $89.16. Its 50% to 61.8% zone at $101.73 to $104.69 is the primary upside target. With the main trend down, sellers could return on a test of that area.
Looking at the moving averages, the 50-day moving average at $99.47 is potential resistance and a trigger point for an upside breakout. The 200-day moving average at $84.51 is guiding the longer-term uptrend and could turn out to be major support if tested.
What to Watch
December WTI Crude Oil Futures
The breakout over $88.00 is supporting my counter-trend upside bias. It will strengthen if $91.09 is overcome. This could lead to a quick test of the 50-day moving average at $92.55 and a possible acceleration into our retracement zone target at $94.44 to $96.93.
A breakdown under $87.80 will weaken my outlook and could lead to a retest of the support cluster at $83.98 to $83.88.
January Brent Crude Oil Futures
Despite the downtrend on the main swing chart, my bias has shifted to the upside because of the successful test of the $92.63 to $87.51 retracement zone and the subsequent breakout to the strong side of the 50% level at $92.63.
I’m looking for the breakout to generate enough upside momentum to challenge the 50-day moving average at $99.47. My outlook will strengthen on this move, putting my main objective at $101.73 to $104.69 on the radar.
A failure to accelerate into the 50-day moving average could be the first sign of weakness. A pullback under the $92.63 pivot will turn my bias to neutral.
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