- West Texas Intermediate oil, WTI, rallied hard from $44.55 to a high of $47.84 as risk soars and output cuts by the Organization of the Petroleum Exporting Countries encourage buying.
- A drop in crude exports from Saudi Arabia in December have also been a supporting factor, and a barrel of oil currently sits at $47.80 at time of writing.
While some nonmember producers and OPEC that began cutting back on production at the start of the year kicks in, whether enough cuts have been applied to sustain a bull market in oil is another question. There are already concerns over economic growth and specifically in China, (caixin manufacturing miss and the absent signs of significant Chinese stimulus or actual progress towards a trade deal), which lead to a wave of supply in global stock markets into year-end.
“Energy markets were not spared from the year-end carnage in global markets,” analysts at TD Securities explained. “While money managers grow increasingly concerned about global demand, the data remains less worrisome. We still think that current prices reflect fear rather than fundamentals, and expect markets to tighten this year. That being said, prices still have a long way to go before momentum wanes and CTAs significantly flatten out their short positions.”
WTI levels
The price was supported by the convergence of several key 4hr moving averages around 45.70/90 and the bulls eye the 100-4hr SMA. However, while below the 50% Fibo level of the 2016 lows to recent peak’s range, the bearish bias remains, especially while below the 76.4% retracement of the June 2017 lows and 2018 highs, with bears looking to 42.50.
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