Oil markets may continue their sideways trend this week, as the trade continues to face pressure from a lack of progress on the fiscal cliff. Background pressure will remain in effect from growing domestic oil production, elevated oil inventories, and last week’s hold at the 50-day moving averages in Brent and WTI.
Oil prices created an inside-day in WTI yesterday and both Brent and WTI again had trouble with their 50-day moving averages. Those technicals may offer pressure again in today’s trade, where the market will also be weighed down by continued growth in U.S. oil production, growth in oil stocks, building gasoline inventories, and generally weak demand.
Oil prices rallied nicely in yesterday’s trade but once again had trouble getting above the 50-day moving averages in WTI and Brent. Today’s trade could witness a similar disposition, as the general reaction by risk markets yesterday to “bullish” news from the Fed was to finish either lower on the day (as equities did) or significantly below the day’s highs (as energies and precious metals did).
The market appears as though it will trade to the downside in the near-term thanks to Monday’s break of key channel support and due to the inability to maintain rallies. Pressure may also come from a lack of progress in fiscal cliff talks, the potential that OPEC leaves production unchanged at today’s meeting, building levels of U.S. gasoline stocks, and high levels of U.S. oil production.
Energy Price Outlook Oil prices may trade lower in the near-term, as Monday’s action failed to respond to moderately favorable developments. There was support for yesterday’s trade given by the bottom of a rising channel pattern at $86.20 and from a recovery in economic data from China and Germany. However, an uninspiring trade in the stock market and a lack of progress in fiscal cliff talks added on to other
This week’s trade in energies could see a mixed trend overall, but selling rallies may still be the most attractive trade at the moment. WTI will find key resistance at the 50-day moving average at $88.20 while strong support will be at the bottom of a bullish flag pattern at $86.20. A busy week is in store, as the weekend’s Chinese economic and trade data will be digested on Monday.
The oil market is a tough call today and could potentially rebound amid channel line support and today’s non-farm payroll report. The channel offers support at $86.10/bbl in WTI, while we think that the payroll report could be spun favorably even if it misses estimates due to superstorm Sandy.
Oil prices may fall slightly in the near-term, as pressure is offered by technical factors and the lack of progress in fiscal cliff negotiations. Background pressure will come from next week’s OPEC meeting where quotas are expected to be left unchanged, and from the growing amount of U.S. oil production.
Energy Price Outlook Oil prices may fall slightly in the near-term, as pressure is offered by technical factors and the lack of progress in fiscal cliff negotiations. Background pressure will come from next week’s OPEC meeting where quotas are expected to be left unchanged, and from the growing amount of U.S. oil production. These could take WTI down toward the $85.00/bbl level through year-end unless a fix to the
Oil prices are likely to hold within their relatively sideways direction in the near-term, as support from a weaker dollar is countered by uncertainty over the fiscal cliff. WTI had a nice bounce early in the session yesterday but fell back to close near the day’s low
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