WTI Oil pops back above $74 in a volatile week ahead of Christmas
Oil prices are back on track towards $84 on Friday, propelled by geopolitical tensions in the Red Sea. Still making headlines going into these last hours of trading before Christmas, Houthi rebels have made the Red Sea a no-go zone for all big freight operators. With a vast number of fleets being redirected around Africa, the demand and price pressure are expected to jump in the coming weeks for Crude. Meanwhile, Angola announced Thursday that the country is leaving OPECi9c-fza1 due to disagreements over lower Oil quotas for the country.
The US Dollar (USD) is sinking as markets go all-in on interest-rate cuts for early 2024. The move comes in contradiction with several warnings from Federal Reserve (Fed) members, who came out saying markets are too eager and too enthusiastic about any rate cuts coming in 2024. The elevated rate differential from US yields against other countries – the main driver for the US Dollar strength in 2023 – appears to be fading, likely leading to mayhem and dislocation between the Fed and global markets at the start of 2024. Crude Oil (WTI) trades at $74.59 per barrel, and Brent Oil trades at $79.474 per barrel at the time of writing. Oil prices are jumping higher as the OPEC+ club faces increasing woes. With Angola leaving the bloc, several other African nations could join. The statement could not have come at a worse time as Brasil is set to enter the organization as an observer, not taking part in production decisions. The more OPEC loses its grip on Oil prices, the wilder and more volatile the price action will get.
On the upside, $74 got broken and tested for support, offering more upside. 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. Below $74, the $67.00 level could still come into play as the next support level to trade at as it aligns with a triple bottom from June. 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 defence. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices fall sharply.
On the upside, $74 got broken and tested for support, offering more upside. 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. Below $74, the $67.00 level could still come into play as the next support level to trade at as it aligns with a triple bottom from June. 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 defence. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices fall sharply.