After all, the oil market continues to trade turbulently as the end of the year approaches.
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The oil market continues to exhibit volatile trading patterns as we head into the end of the year, and Thursday was no exception.
In the case of West Texas Intermediate (WTI) crude oil, it made an initial attempt to move higher on Tuesday, but has since fallen. The $75 level appears to be acting as a key resistance point, raising the need to assess whether the pullback from the $68 level was caused by profit taking or signals the beginning of a larger move. I’m urging you. The importance of the $68 level as a major multi-year support level adds weight to this pullback. Often, a pullback at such an important level can indicate a bottoming process, meaning continued buyer interest during a decline.
This potential bottoming process suggests reluctance to initiate short positions in oil at this time. Despite all the concerns surrounding oil prices, including the possibility of a global recession, there is likely to be increased interest and buying support near the $72 level.
In the Brent crude oil market, a pullback from the all-important $80 level has been observed. However, it is important to note that potential support exists at the $77 level. Small positions in both types of oil are attractive now and serve as a way to accumulate positions for next year. The underlying premise revolves around the expectation that central banks, particularly the Federal Reserve, will begin lowering interest rates, stimulating economic growth and subsequently increasing oil demand.
While supply trends in the oil market are noteworthy, it is worth emphasizing that we are closer to the lower end of the price spectrum than the upper end. So we are looking for signs of support and short-term equilibrium to engage the market. Also, due to potential liquidity constraints associated with the holiday season, caution should be taken when determining position sizes during this period.
After all, the oil market continues to trade in a chaotic manner as the end of the year approaches. WTI crude oil is struggling with resistance at the $75 level, while Brent crude has retreated from the $80 level with $77 providing potential support. Currently, small positions in both oil grades are attractive for long-term positions. Expectations for central bank interest rate cuts and economic growth are among the factors influencing this sentiment. While supply concerns remain, a cautious approach is recommended as liquidity issues may arise during this period.
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