LIVE MARKETS-Crude oil futures: About to make a big leap, or come up lame?

ReutersJan 16, 2025 2:08 PM

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CRUDE OIL FUTURES: ABOUT TO MAKE A BIG LEAP, OR COME UP LAME?

Oil prices are dipping on Thursday a day after settling at multi-month highs on the latest U.S. sanctions on Russia and a larger-than-forecast draw in U.S. crude stocks.

Nevertheless, NYMEX crude futures CLc1, ended last Friday above the weekly resistance line from their March 2022 peak. Now, at around $79.75, the futures are on track to rise for a fourth-straight week.

With this, traders are eyeing crude's action vs a key hurdle in the form of its 200-week moving average:

In early December, crude futures held support, and at the same time, their disparity vs the 200-week moving average (WMA) bottomed at 0.841x on a weekly closing basis.

With the current rally, the futures are attempting to reclaim the 200-WMA, which is now around $80.25, for the first time since mid-July of last year. (The disparity now stands at 0.994x. Parity is 1.0x).

It remains to be seen if the 0.841x early-December disparity trough will prove to be a major low. Indeed, if crude can end Friday above this long-term moving average, the potential will be for much greater strength. The 200-WMA would then become a swing support level.

Conversely, a 200-week disparity break of 0.841x can suggest massive downside risk for crude futures.

Meanwhile, with crude futures up more than 11% in 2025, energy .SPNY is the best performing S&P 500 .SPX sector YTD, with a 7.6% gain. The SPX is up about 1.2% so far this year.

(Terence Gabriel)

FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:

RICHEMONT RESULTS: WHAT IT MEANS FOR THE LUXURY SECTOR - CLICK HERE

UK BANKS: FUNDAMENTALS TOO GOOD TO IGNORE - CLICK HERE

LUXURY LIFTS EUROPEAN EQUITIES AFTER RICHEMONT RESULTS - CLICK HERE

EUROPE BEFORE THE BELL: FUTURES SIGNAL FURTHER GAINS - CLICK HERE

BRIEF RELIEF FOR MARKETS AFTER TAME US INFLATION - CLICK HERE

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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