Crude Oil in orbit around $70.00, looking for a weekly close above it
Oil prices are in search to end the week on a high note by attempting to close above $70.00.
Traders are torn in their choice between a possible short term upside against a long term bearish turnout.
The US Dollar Index trades below 107.00 and fails to hold onto gains.
Crude Oil is making its way back above $70.00 this Friday in the US trading session with markets reluctant to dive into the rally seen earlier in the week. The OPEC+ report was a good element for Oil prices to head higher, but traders are still warning for the 2025 projections when President-elect Donald Trump will stay in the White House. Several commitments have already been put in place to drill more US Oil and become a bigger exporter in an already oversupplied market.
The US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is holding on to gains ahead of next week’s Federal Reserve meeting. The Greenback is seeing inflow again with interest rate gaps widening between US against Chinese and European rates, fueling a stronger Greenback.
At the time of writing, Crude Oil (WTI) trades at $70.37 and Brent Crude at $73.80.
Oil news and market movers: Small upticks
Oil producer Abu Dhabi National Oil Co., or Adnoc, has cut crude allocations to some Asian customers, according to equity and term lifters of the oil, Bloomberg reports.
Weak fundamentals will pressure oil prices in 2025 as a looming supply glut mutes the effect of war risks, sanctions and OPEC+ cuts, Bloomberg analyst Pol Lezcano reports.
The year-end scramble by US Oil suppliers to lower their tax bills typically spurs a December jump in crude exports. But seasonally low inventories on the Gulf Coast are set to buck that trend, analysts say, Reuters reports.
Oil Technical Analysis: Shaky end of the year
Crude Oil prices might have rallied, but traders are cautious about adding to that rally. With the year-end and the prospects of a new US President that favors drilling more Oil, any upside looks limited. Expect any uptick or leg higher to be short-lived, with profit taking bound to happen before the 2024 comes to an end.
The 55-day Simple Moving Average (SMA) at $70.06 is being tested and needs to see a hold and daily close above it in order to become support. Further up, $71.46 and the 100-day SMA at $71.12 will act as thick resistance. In case Oil traders can plough through that level, $75.27 is up next as a pivotal level.
On the downside, it is too early to see if the 55-day SMA will be reclaimed again at $70.06. That means that $67.12 – a level that held the price in May and June 2023 – is still the first solid support nearby. In case that breaks, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the low from 2023.
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