Oil prices temporarily rebounded from the low set on December 7th, driven by several bullish fundamentals from the US. Nevertheless, they are restrained by weaker demand, as confirmed by a downward price channel and other technicals.
The US economy added 199,000 jobs, leading to a decrease in the unemployment rate to 3.7%. This, coupled with the US acquiring 3 million barrels of oil reserves, initially provided short-term support to the declining prices.
In contrast, the voluntary supply cut by OPEC+ appears to be having little to no effect on bolstering overall oil demand. Another challenge lies in the transparency of data from certain countries within OPEC+, making it difficult to gauge whether they are adhering to the agreed-upon supply cuts. However, the available data indicates overall weaker oil demand, which is partly driven by low consumption in the Chinese economy.
“Oil prices have been sliding down in a downward channel since October, but, as pointed out by Abrar Bhatti, an analyst at Exness, we have yet to witness the formation of a 'death cross.' Although OPEC+ is tightening supplies, a longer timeframe is needed to gauge the impact of these measures.”
On the charts, a visible downtrend is evident, supported by an ADX reading of 32. Additionally, the RSI is not yet in oversold territory, nor does it show any concrete evidence of trend reversal through divergence. The price is also trading below both 50-day Moving Average and 200-day Moving Average. If the downtrend was to continue, the next support zone could be at $67. On the upside, the immediate short-term resistance would be the high set by the candle on December 12th.
The US economy added 199,000 jobs, leading to a decrease in the unemployment rate to 3.7%. This, coupled with the US acquiring 3 million barrels of oil reserves, initially provided short-term support to the declining prices.
In contrast, the voluntary supply cut by OPEC+ appears to be having little to no effect on bolstering overall oil demand. Another challenge lies in the transparency of data from certain countries within OPEC+, making it difficult to gauge whether they are adhering to the agreed-upon supply cuts. However, the available data indicates overall weaker oil demand, which is partly driven by low consumption in the Chinese economy.
“Oil prices have been sliding down in a downward channel since October, but, as pointed out by Abrar Bhatti, an analyst at Exness, we have yet to witness the formation of a 'death cross.' Although OPEC+ is tightening supplies, a longer timeframe is needed to gauge the impact of these measures.”
On the charts, a visible downtrend is evident, supported by an ADX reading of 32. Additionally, the RSI is not yet in oversold territory, nor does it show any concrete evidence of trend reversal through divergence. The price is also trading below both 50-day Moving Average and 200-day Moving Average. If the downtrend was to continue, the next support zone could be at $67. On the upside, the immediate short-term resistance would be the high set by the candle on December 12th.