Market Analytics and Considerations
Key Points
In the European Session, WTI Prints a New YTD Low.
Chinese exports are still declining, which is putting pressure on oil prices.
FUNDAMENTAL Perspective FOR WTI
After three days of losses, crude oil is still under pressure this morning, printing a new YTD low. Given the strengthening currency and rising recessionary fears, the recent price cap on Russian oil has had virtually little effect on oil prices.
Fears about demand have not been allayed by this morning’s news from China on the further relaxation of covid regulations. As speculations started to circulate last week, it would appear that the lifting of limitations has been largely factored in by market participants. People with minor symptoms and symptomatic Covid-19 instances are permitted to quarantine at home, according to the Chinese health authority. An significant indicator of weak global demand, which may be impacting oil prices too though, was the significant decline in Chinese imports and exports in November. Exports decreased by 8.7% last month as customers prioritized necessities over luxury and inflation started to have an impact on global demand.
We have a ton of Crude EIA Oil data for the remainder of the day. Considering that US oil companies are still pumping oil at a record rate, the report could add some volatility and create the prospect of yet more decline. During the US session, the oil price could be further impacted by a prolongation of the dollar index recovery.
WTI had three straight days of declines from a technical standpoint before posting a new YTD low during the European session. With the 20-day MA resting near the $80 handle, WTI is now trading somewhat off the MAs. The RSI is presently in oversold position on both the 4H and daily timescales, suggesting that a pullback may be imminent. Nevertheless, this will probably rely on the dollar index and the announcement of the EIA statistics later this afternoon.
With 83% of traders presently maintaining long positions, retail traders are presently Long on Crude Oil. The fact that traders are long means that Crude Oil may steadily decline, and we normally adopt a counterintuitive stance to the opinion of the majority.
