Crude oil WTI: Downside contained?

TVC:USOIL   CFDs on WTI Crude Oil
Oil WTI failed to break over the 50-day moving average during the session on January 3, and sellers returned after the price topped $80 per barrel.

This resulted in a rapid drop to $73/ bbl , making it an interesting area to assess the strength of buyers on dips once again. Remember that the US is actively purchasing crude oil at 67-72 dollars per barrel range in order to replenish its strategic reserves ( SPR ), which have fallen to their lowest level since 1983.

The level of $70/ bbl generated a double bottom between December 9 and December 12, 2022, luring buyers at those prices.

In the coming weeks, the market may retest those levels or even hit $69-68.5/bbl (December 21, 2021 lows). In such a case, the RSI may show a bullish divergence since it will not fall as low as it did at the December 9 price lows.

Thus, the short-term scenario may still have another leg down, albeit the proximity to the purchasing window may limit bearish pressure.

A fresh rise over $80/ bbl (the 50DMA and the negative trendline from June to November 2022) would open up new positive prospects towards $84/ bbl (23.6% Fibonacci) first and $90/ bbl (psychological and highs of November 10, 2022) afterwards.


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