WTI approaches support
Brent and WTI were both lower this morning, giving back much of yesterday’s gains. Prices have recovered a touch this afternoon, yet both contracts appear to be consolidating again, following last week’s sell-off which itself followed a lengthy period of sideways movement. But whereas the latter occurred around significant resistance areas of $85 per barrel for WTI, the current consolidation is unfolding just north of support at $80. If we continue to hold around this area for the next couple of sessions, that should help to reset the MACD by bringing it down further below ‘neutral’ and towards ‘oversold’ area. If so, this could provide a launchpad for another rally which could take prices back up to fresh highs for 2024. As you can see in the daily chart above, having tested the top end of the upwardly-trending channel, crude is now heading back towards the lower end, which, happens to come in around $80. That’s the technical side.
Fundamentally, investors continue to shrug off geopolitical tensions while factoring in the prospect of lower demand growth. This is due to a softer Chinese economy together with a rebound in US inflation which means interest rates will stay ‘higher for longer’ and thereby crimp future economic growth.
Fundamentally, investors continue to shrug off geopolitical tensions while factoring in the prospect of lower demand growth. This is due to a softer Chinese economy together with a rebound in US inflation which means interest rates will stay ‘higher for longer’ and thereby crimp future economic growth.
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