Crude prices have steadied this morning with front-month WTI managing to hold above initial support around $73. Oil has fallen steadily since last Thursday afternoon when it was closing in on $80 per barrel. The catalyst for the move lower was the delayed OPEC+ production cut announcement which underwhelmed market participants. The group plans an overall reduction of 2.2 million barrels per day going into next year, which is an increase on the current 1.3 million bpd cut from Saudi Arabia and Russia. But there had been hopes that OPEC+ may have looked to reduce output even more, given the downside pressure on oil prices. Supply is plentiful, and inventory levels are high. Yet the demand outlook is poor, as global growth slows led by China. We’ll see if support holds over the week, or if we see crude drop below $70, and enter into the band of support that stretches down to $67.50. Traders are keeping a wary eye on the situation in the Middle East, particularly since there have been a series of attacks on commercial shipping in the Red Sea.
As you can see from the 4-hour chart of front-month WTI, we still have a positive divergence showing between price and the MACD. But there’s no sign yet that a bottom is in.
As you can see from the 4-hour chart of front-month WTI, we still have a positive divergence showing between price and the MACD. But there’s no sign yet that a bottom is in.