WTI Oil heads towards $74
Oil prices rally for a third day in a row,, fueled by the outcome of Wednesday’s US Federal Reserve meeting and Chairman Jerome Powell’s dovish remarks. The Fed has confirmed to markets that rate cuts are coming in 2024, a sign that markets wanted to see. Lower interest rates ahead could mean a push in sentiment and economic activity, triggering an increase in demand for Crude. Meanwhile, the US Dollar (USD) has lost over 2% of its value when gauged by the US Dollar Index (DXY) since Wednesday.
The European Central Bank (ECB) surprised markets by not committing to rate cuts and mentioning cuts were not even an option. With positive US economic data and the Fed ready to cut in 2024, the US economic outlook has brightened. Meanwhile, economic activity in the Eurozone has been stagnant for months, and the ECB isn’t committed to cutting interest rates in 2024. Crude Oil (WTI) trades at $72.20 per barrel, and Brent Oil trades at $77.08 per barrel at the time of writing.
Oil prices could get some help, but not from OPEC+. Commodities are gaining ground as investors dissect the message from the Fed on rate cuts. Rate cuts mean lower interest rates, and thus more spending, growth, production, and more demand for commodities. Who would have thought last week that the Fed would be the one to save Oil from falling below $67, and not OPEC. On the upside, $74 is the first hurdle that needs to be taken back by Crude bulls. Once through there, $80 comes into the picture. Although still far off, $84 is next on the topside once Oil sees a few daily closes above the $80 level. Still, Oil is not out of the woods yet. The $67.00 level could still come into play, which aligns with a triple bottom from June, as the next support level to trade at. Should that triple bottom break, a new low for 2023 could be close at $64.35 – the low of May and March – as the last line of defense. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices were to fall sharply.
Oil prices could get some help, but not from OPEC+. Commodities are gaining ground as investors dissect the message from the Fed on rate cuts. Rate cuts mean lower interest rates, and thus more spending, growth, production, and more demand for commodities. Who would have thought last week that the Fed would be the one to save Oil from falling below $67, and not OPEC. On the upside, $74 is the first hurdle that needs to be taken back by Crude bulls. Once through there, $80 comes into the picture. Although still far off, $84 is next on the topside once Oil sees a few daily closes above the $80 level. Still, Oil is not out of the woods yet. The $67.00 level could still come into play, which aligns with a triple bottom from June, as the next support level to trade at. Should that triple bottom break, a new low for 2023 could be close at $64.35 – the low of May and March – as the last line of defense. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices were to fall sharply.