Crude oil WTI: Downside contained?
Oil WTI failed to break over the 50-day moving average during the session on January 3, and sellers returned after the price topped $80 per barrel.
This resulted in a rapid drop to 773/BBL, making it an interesting area to assess the strength of buyers on dips once again. Remember that the US is actively purchasing crude oil at 67-72 dollars per barrel range in order to replenish its strategic reserves (SPR), which have fallen to their lowest level since 1983.
The level of 770/BBL generated a double bottom between December 9 and December 12, 2022, luring buyers at those prices.
In the coming weeks, the market may retest those levels or even hit $69-68.5/bbl (December 21, 2021 lows). In such a case, the RSI may show a bullish divergence since it will not fall as low as it did at the December 9 price lows.
Thus, the short-term scenario may still have another leg down, albeit the proximity to the purchasing window may limit bearish pressure.
A fresh rise over 880/BBL (the 50DMA and the negative trendline from June to November 2022) would open up new positive prospects towards 884/BBL (23.6% Fibonacci) first and 990/BBL (psychological and highs of November 10, 2022) afterwards.
This resulted in a rapid drop to 773/BBL, making it an interesting area to assess the strength of buyers on dips once again. Remember that the US is actively purchasing crude oil at 67-72 dollars per barrel range in order to replenish its strategic reserves (SPR), which have fallen to their lowest level since 1983.
The level of 770/BBL generated a double bottom between December 9 and December 12, 2022, luring buyers at those prices.
In the coming weeks, the market may retest those levels or even hit $69-68.5/bbl (December 21, 2021 lows). In such a case, the RSI may show a bullish divergence since it will not fall as low as it did at the December 9 price lows.
Thus, the short-term scenario may still have another leg down, albeit the proximity to the purchasing window may limit bearish pressure.
A fresh rise over 880/BBL (the 50DMA and the negative trendline from June to November 2022) would open up new positive prospects towards 884/BBL (23.6% Fibonacci) first and 990/BBL (psychological and highs of November 10, 2022) afterwards.
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