Oil prices have risen by about 7% since the beginning of the week, and by about 10% from the low recorded on October 20 at $60.07 to yesterday’s high of $66.36. However, prices are still down by about 12% since the start of the year.
The positive factors currently supporting oil prices include:
• Washington’s imposition of new sanctions on the Russian oil companies “Rosneft” and “Lukoil,” the country’s two largest producers, which together account for half of Russia’s crude exports. The move aims to pressure Moscow into negotiating a peace agreement with Ukraine. In addition, the U.S. Treasury Department expressed its readiness to take further measures against Russia. Notably, these sanctions represent a shift in the U.S. stance toward Russian oil after a period of hesitation.
• Market expectations of two additional U.S. interest rate cuts this year, which could boost oil demand.
• An imminent trade agreement between the United States and India, which may include New Delhi’s commitment to gradually reduce its imports of Russian oil, currently accounting for about one-third of India’s total imports.
• The U.S. Department of Energy’s announcement that it will begin purchasing one million barrels to refill the Strategic Petroleum Reserve.
• Ongoing geopolitical tensions between Russia and Ukraine.
• A decline in U.S. crude oil inventories by 0.961 million barrels last week, lower than the expected 2.200 million barrels and the previous reading of 3.524 million barrels.
From a technical perspective, crude oil prices are currently trading above the primary support level, represented by the 20-day moving average (in gray) at $64.04, and hovering above the secondary support level, the 50-day moving average (in blue) at $66.05. The next challenge lies in whether oil prices can remain above the 20-day and 50-day moving averages to attempt a move toward the resistance level, represented by the 200-day moving average (in yellow) at $68.69.
As for the Relative Strength Index (RSI), it currently stands at 55, indicating positive momentum for oil prices. A bullish crossover is also observed between the MACD line (in blue) and the signal line (in orange), reinforcing expectations for continued upward momentum in crude oil prices.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
