Back

Oil Falls From One-Month High on Thin Trading, Weak Technicals

(Bloomberg) — Oil retreated from its highest close in almost a month as key technical gauges flashed weakness amid thin holiday trading.

Most Read from Bloomberg

West Texas Intermediate fell by 1.9% to settle near $74 a barrel after closing at the strongest level since November in the prior session. Traders focused on evening out positions before the new year, a move that capped prices while low volumes exacerbated downward swings.

Both WTI and Brent crude formed a bearish “death cross” — where the 50-day moving average crosses below the 200-day — for the first time since September 2022. In the past, that pattern has heralded further weakness.

Read More: India’s Modi Talks to Saudi Crown Prince After Oil Vessel Attack

At the same time, timespreads — a critical barometer for supply and demand — softened, with the gap between WTI’s nearest two contracts at 24 cents a barrel in contango compared with 14 cents yesterday.

Supply risks posed by Yemen-based Houthi militants haven’t abated even as incidents in the Red Sea slow, with shipping giant Hapag-Lloyd AG saying it will avoid the area despite the launch of a US-led taskforce to protect the key trade route.

Even so, oil remains on course for its first annual decline since 2020. There are widespread concerns about a glut next year despite fresh supply curbs from the Organization of Petroleum Exporting Countries and its allies.

“As we approach the year end, more of the trade will focus on re-aligning positions on thin trading volume unless of course we see further attacks in the Red Sea area,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities, in a note to clients.

Story continues

To get Bloomberg’s Energy Daily newsletter into your inbox, click here.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.


Source link

Wealthfargo
Wealthfargo

Leave a Reply

Your email address will not be published. Required fields are marked *

We use cookies to give you the best experience. Cookie Policy