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Market update: brent crude, WTI edge cautiously higher

US Q4 GDP data could shape the ‘global growth slowdown’ narrative; brent crude upside level of interest at $82 and IG Client Sentiment is mixed while longs massively outweigh shorts.

Source: Bloomberg

The oil market is grappling with indecision, a trend likely to persist as long as oil fundamentals remain stable. Economic projections for 2024 suggest subdued global economic growth, potentially leading to minimal oil demand growth. This scenario raises the prospect of an oversupplied oil market, exerting downward pressure on prices. In terms of growth, attention this week shifts to oil (WTI) as the US GDP data for the fourth quarter is due. The last quarter of 2023 is anticipated to show a marked decline from the impressive 4.9% growth in Q3 to 2%.

On the other side of the equation, current tensions in the Middle East and threats to Western shipments traversing the Red Sea could impact prices. However, as only about 12% of the total global seaborne oil trade navigates through the Red Sea, a significant disruption would be necessary to materially affect oil prices.

Brent crude technical analysis – upside level of interest at $82

Brent crude oil prices have been sluggish, hampered by an unclear fundamental outlook. The MACD indicator suggests a gradual, steady uptrend, particularly following the December 13th swing low. If this moderate ascent continues, $82 emerges as a critical resistance level, having previously acted as a pivot point. Furthermore, the $82 mark coincides approximately with the 200-day simple moving average. Support lies significantly lower, at the $71.50 level, with an intermediate $77 level acting as the 50% Fibonacci retracement of the major 2020–2022 rise.

Brent crude oil daily chart

Source: TradingView

WTI faces resistance ahead of significant $77.40 marker

WTI oil prices have successfully navigated the $72.50 test, opening up a return to the significant long-term level of $77.40 – which coincides with the 200-day simple moving average. The uplift in prices since the swing low continues with trepidation, lacking conviction. The $72.50 level appears as near-term support.

WTI oil daily chart

Source: TradingView

IG Client Sentiment 'mixed' while longs massively outweigh shorts

Oil - US Crude: Retail trader data shows that 83.18% of traders are net-long, with the ratio of traders long to short at 4.94 to 1.

We typically take a contrarian view to crowd sentiment, and the fact that traders are net-long suggests Oil - US Crude prices may continue to fall.

Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Oil - US Crude trading bias.

IG Client Sentiment (US oil) WTI

Source: DailyFX

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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