Oil Prices Surge to Two-Week High on Technical Strength and Gas Rally
The oil market is experiencing a resurgence, with prices settling near $71, the highest close in two weeks. This upward trend is largely attributed to technical indicators and a significant increase in natural gas prices.
Technical Indicators Point to Further Gains
West Texas Intermediate crude has managed to hold above its 100-day moving average, a crucial technical level that has triggered more buying activity. Furthermore, algorithmic traders have shifted their stance, moving from a net-short position in Brent crude to a net-long position, according to data from Bridgeton Research Group.
Natural Gas Prices Soar on Cold Weather Forecast
A colder-than-normal weather forecast has driven natural gas futures up by 20%, the largest increase since the contract began trading in 2012. This surge in gas prices could lead to increased short-term oil consumption, despite an otherwise sluggish demand outlook.
Market Sentiment Shifts on Geopolitical Risks and Cold Weather
According to Bart Melek, global head of commodity strategy at TD Securities, “Cold weather and geopolitical risks have prompted discretionary traders to take a long position, while the higher prices have attracted trend followers.” However, the market remains rangebound, with concerns about a potential supply glut in 2025 and ongoing geopolitical conflicts in the Middle East.
Traders Await Inauguration of New Administration
The oil market is also awaiting the inauguration of Donald Trump in January, which may impact crude supply and demand. Traders are eager to see how the new administration’s policies will shape the energy landscape.
Despite Gains, Caution Remains
While oil prices have surged, the market remains cautious due to the uncertainty surrounding global supply and demand. As the energy landscape continues to evolve, traders will be closely watching for any signs of change.
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