The current uptrend in WTI crude oil futures started on Dec. 20, 2024, after finding strong buying support at $68.46 amid changing weather conditions in Europe and the U.S.
Undoubtedly, growing expectations over an additional economic stimulus by China pushed the oil prices to move higher but this upside could generate selling spree shorty as the oil companies have been exiting the North Sea (NYSE:SE) to focus on newer basins, resulted in declining production.
Moreover, the oil and gas fields are at risk of freezing this week if some of the colder forecast hold up, we could see a significant drop in production that could lead to some tightness and supplies pipelines could also freeze as the wind power generation could hamper after the joining of President-elect Donald Trump on Jan.20, 2025 as climate-sceptic Trump has long oppose wind farms.
On Friday, Trump criticized the British government’s energy policy with a demand the country with a demand the country “open up” the ageing North Sea oil and gas basin and get rid of wind farms.
Technical Levels to Watch
Weekly Chart: After trading in a narrow range, oil futures found a breakout during the last week but the upside could be capped as the oil futures are teetering at a pivotal point, just below the 100 DMA which has had formed a bearish crossover with a downward move below the 200 DMA at $80.
Undoubtedly, if the WTI crude oil futures could not sustain above the 100 DMA at $76.65, selling spree could follow this upward move as the next significant resistance is at 200 DMA at $80.
Daily Chart: Despite the formation of a ‘Bullish Crossover’ with an upward crossing the 9 DMA and 20 DMA are above the 50 DMA and 100 DMA, resulting in steep surge of oil prices.
But the appearance of a bearish flying Dozy could generate fresh selling spree as the crude oil futures still trading below the 200 DMA at $75.55, which is the next significant resistance.
Takeaway for Traders
WTI Crude Oil futures could find some more upside, probably up to $80, but a downward move below the 100 DMA could generate fresh selling spree that could push the crude oil futures to retest the significant support at $65 till the President-Elect Donald Trump joins office on Jan. 20, 2025.
Disclaimer: Readers are requested to create any position in crude oil at their own risk, as this analysis is purely based on the observations.