Crude Continues Rally On Market Optimism
Oil prices rose another 2% on Monday to be up around 6% from Thursday’s low. The market has been buoyed by optimism that the Fed is done tightening and that there will be a soft landing, which will be positive for demand. It also resulted in the USD index falling another 0.5%, which also supports crude. Some risk premium was also priced in yesterday for threats to shipping after a Japanese cargo ship was hijacked by Iran-backed Yemeni rebels.
- WTI rose 2% to clear $77 and is now at $77.58/bbl down from the high of $78.46. It approached resistance at $78.91, 20-day EMA. It is still down 3.6% this month though.
- Brent broke through $82 and is 1.8% higher at $82.02/bbl, off the intraday high of $82.94. Key short-term resistance is at $83.97, November 14 high. It is still 3.5% lower in November.
- It is generally expected that Russia and Saudi Arabia will extend their output cuts into 2024 but there is speculation that the rest of OPEC will announce further reductions at its meeting this weekend due to the recent drop in prices.