Has crude turned a corner?
Both Brent and WTI were a touch weaker in early trade this morning. But both contracts have put in impressive rallies over the past fortnight. Oil prices plunged following the US Labor Day holiday on Monday 9th September. The sell-off saw front-month WTI break below $65 per barrel to trade at its lowest level since May last year. Front-month Brent hit its lowest level since December 2021. Since then, Brent and WTI have tacked on 8% and 10% respectively as of Friday’s close. While impressive, the rally has been relatively slow and steady, rather than an explosive one that could have been expected, coming as it did from incredibly oversold conditions. The move has seen the daily MACDs turn significantly higher, although both remain oversold. The question now is if the bottom is in for crude oil. If so, then pull-backs may be buying opportunities. But it’s probably still too early to declare the ‘all clear’ for crude. Traders should keep a close eye on how the next pull-back develops. If it proves relatively shallow before heading up again, then oil may have finally turned a corner. But if it retraces more than around 50% of recent gains, then a retest of this month’s lows may be on the cards.
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