2023-12-27 22:27:24
International oil prices fell back from their December highs on Wednesday (27th), with investors continuing to pay attention to the development of the situation in the Red Sea and worrying regarding the possibility of interruptions in crude oil transportation.
energy commodity prices
- West Texas Intermediate (WTI) crude oil futures for February delivery fell $1.46, or 1.9%, to settle at $74.11 a barrel.
- Delivered in FebruaryBrent crude oil (Brent) futures fell $1.42, or 1.8%, to $79.65 a barrel.
- Gasoline futures for January delivery fell 0.2% to settle at $2.155 a gallon.
- Delivered in JanuaryThermal Fuel FuturesPrices fell 1.7% to $2.624 per gallon.
- Natural gas futures for January delivery rose 2.7% to settle at $2.619 per million Btu.
market drivers
Oil prices rose to December highs following the Houthi rebels, who are backed by Iran, claimed they attacked the Mediterranean Shipping Company container ship MSC United VIII with missiles in the Red Sea on Tuesday and attempted to attack Israel with drones. This has been confirmed by Mediterranean Shipping Company.
A week ago, the United States announced the launch of an international naval operation to deter Houthi rebel attacks on commercial shipping in the Red Sea. Maersk Line said on Sunday it would resume traffic in the Red Sea, putting pressure on crude oil prices on Tuesday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, believes that,WTI crude oilFutures prices faced significant resistance in the $74-75 per barrel range on Tuesday, although the “bullish market reaction” looked relatively weak given potential shipping disruptions.
Rebecca Babin, senior energy trader at CIBC Private Wealth US, reported that at the same time, demand concerns are also hanging over the market, especially in China, where the strong demand seen in the first nine months of this year has begun to slow down.
“The market expects demand to grow by 1.2 million barrels/day to 1.6 million barrels/day next year, of which regarding 800,000 barrels/day will come from China, with aviation fuel as the bulk.” She pointed out that the market is most worried regarding investors’ lack of confidence in China’s economy next year. Secondly, there is concern that U.S. production will continue to exceed expectations as it did in 2023.
However, Babin said that because the market is more cautious, it has set a lower threshold for positive surprises in 2024, unlike expectations of large-scale inventory consumption in 2023, which will be difficult to achieve.
On Tuesday, WTI crude oil showed a bearish “death cross” pattern, that is, the 50-day moving average fell below the 200-day moving average from top to bottom and remained below, and the 200-day moving average showed a downward trend.
The 50-day moving average is a widely watched short-term trend-following indicator, while many view the 200-day moving average as the dividing line between long-term uptrends and downtrends. As a result, many Wall Street chart watchers believe the death cross signals the transition of a short-term pullback into a longer-term downtrend.
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