WTI crude oil dropped below $70.4, losing the gains it had made the day before. This happened because the US dollar became stronger, affecting the oil price.
The dollar reached its highest level in more than two years because the Federal Reserve decided to reduce the cost of borrowing money as was expected. However, they also indicated they might not reduce the rates as much next year.
EIA Reports Drop in US Crude Oil Reserves
In other news, there was some positive support for oil prices. The Energy Information Administration (EIA) report showed that crude oil stored in the US decreased by nearly 1 million barrels in the second week of December, following a decrease of 1.4 million barrels the week before.
Kazakhstan Agrees to Extend Oil Production Cuts
Additionally, Kazakhstan said it would follow an agreement by OPEC+ to keep cutting down on oil production next year, a change from its earlier plan to increase oil production.
Despite this, the possibility of more oil being produced by countries not part of OPEC+, like the US, Canada, and Brazil, keeps the hopes for higher oil prices in check.
Crude Oil Technical Analysis – 19-December-2024
As of this writing, the commodity in discussion trades at approximately $69.7, stabilizing above the 50-period simple moving average. The market outlook remains bullish as long as the black gold trades above the $69.2 or the ascending trendline.
That said, the immediate resistance is at $70.0. From a technical perspective, the uptrend will likely resume if bulls close above this level. In this scenario, oil prices will likely march toward $70.0.
Furthermore, if the buying pressure exceeds $70.0, the buyers’ path to the December 13 high at $71.5 could be paved.
- Also read: Silver Downtrend Resumed: Targeting $30
The Bearish Scenario
Please note that the bullish outlook should be invalidated if Crude oil prices fall below $69.2. If this scenario unfolds, the next bearish barrier will be the 61.8% Fibonacci level at $68.7.