Investment Manager Reveals: Oil Futures Surge Amid Changing Weather Conditions and Economic Stimulus Expectations
The current uptrend in oil futures, which started on Dec. 20, 2024, has been fueled by strong buying support at $68.46, driven by changing weather conditions in Europe and the U.S. Expectations of an additional economic stimulus by China have also pushed oil prices higher.
However, this upside could be short-lived as oil companies are exiting the North Sea to focus on newer basins, leading to a decline in production. Moreover, the risk of freezing in oil and gas fields this week could result in a significant drop in production, causing tightness in supplies. Additionally, pipelines could freeze as wind power generation may be hampered by the climate-sceptic views of President-elect Donald Trump.
Technical analysis shows that oil futures are at a pivotal point, just below the 100 DMA, with a bearish crossover below the 200 DMA at $80. If WTI crude oil futures fail to sustain above the 100 DMA at $76.65, a selling spree could follow, with the next significant resistance at the 200 DMA at $80.
Despite a ‘Bullish Crossover’ on the daily chart, the appearance of a bearish flying Dozy could lead to fresh selling pressure, with crude oil futures still trading below the 200 DMA at $75.55.
Traders should take note that WTI Crude Oil futures could see further upside towards $80, but a drop below the 100 DMA may trigger a selling spree, potentially retesting the significant support at $65. It is advised that readers create any position in crude oil at their own risk, as this analysis is purely based on observations.
In summary, the surge in oil futures is driven by changing weather conditions, economic stimulus expectations, and geopolitical factors. Traders should closely monitor technical levels and be prepared for potential market fluctuations in the coming days.