We can see a bullish trend in the H1 and H4 charts.
Central banks -excluding PBoC- were hawkish enough to increase the risk of recession, reducing energy demand. On top of that, we had fragile economic data from the most developed economies, mainly China, reigniting fears that the poor economic outlook and looming stagnation will reduce oil demand.
The Oil price is effecting by various factors, including storms in the US. The latest American Petroleum Institute weekly report shows that US inventories recorded a bigger-than-expected weekly draw. This is while concerns over adverse weather conditions weighed on the outlook for near-term demand. Especially in the mid-western of the US, as potential travel disruptions during the New Year holiday season could further dent demand for fuel.
According to the American Petroleum Institute (API), US inventories fell by -3.069M barrels in the week ended December 16. This is much bigger than -0.167M forecasts, and the 7.819M barrels increase the week before that. In official data, also we expect the same draw, a 1.7 million barrel drop in inventories later in the day. The decline in inventories comes amid supply disruptions caused by the temporary closure of the Keystone pipeline.
The recession concerns, in line with the cap of $60 per barrel set by G7 leaders on Russian oil, can limit supply. Russian President Vladimir Putin has threatened to cut production and refuse to sell oil to any country that follows the G7 resolution.
In the OPEC+ meeting in early December, members decided to continue oil production cuts into the next year to boost oil prices, curtailing oil supplies by 2 million barrels per day. This decision balanced the demand and production outlook.
Oil prices were volatile last week, but this week was growing slowly so far. WTI price started the previous week at a yearly low of about $70 per barrel, raised to $77.7 by mid-week, and finally closed lower, near $74.5 per barrel on Friday. This week due to mentioned news and events, WTI prices raised slowly, and now in H1 and H4 charts, we can see a bullish trend. The next resistance sits around $83. On the flip side, if the WTI price declines, it may encounter support of around $63 per barrel.
