Crude oil fell more than one percent in the first trading session of 2024, as interest rate expectations fell and worries that tensions in the Red Sea could disrupt supplies, weighted on the sentiment.
More active Brent crude futures for March delivered 1.47% to $75.91. MCX crude fell 1.39% to 5,943. US West Texas Intermediate crude futures fell 1.20% to $70.44 a barrel yesterday.
Prices were depressed as investors cut expectations for a tax cut in 2024. Lower interest rates reduce borrowing costs for consumers, which can boost economic growth and oil demand. In addition, the dollar strengthened on Tuesday as stocks fell, pushing oil lower. A stronger dollar makes oil more expensive for investors holding other currencies.
Prices received support last week after Houthi rebels attacked ships in the Red Sea over the weekend and an Iranian warship arrived on Monday. A wider conflict could close waterways vital to oil transport and disrupt trade flows.
In addition, expectations of abundant supply in the first half of 2024 supported prices ahead of OPEC+’s plan to hold a meeting of the ministerial monitoring committee (JMMC) in early February. An exact date has not yet been decided, three alliance sources said.
Data from the American Petroleum Institute industry group will be released later today, and data from the Energy Information Administration, the statistics division of the US Department of Energy, will be released on Thursday, a day delayed by the New Year and holidays. Both data could generate some volatility. In addition, the minutes of the FOMC meeting will also be closely watched today.
Technical Outlook
Crude oil price failed to break its massive resistance at 6360 and retreated from the high of 6343. Prices touched a low 5861 in earlier trade, traded down by 1.01% at 5883.
According to the report published on December 27, 2023, prices did not break the resistance 6360 and then fell to 5861.00.
On the chart above, prices are trading on key support at 5825, with a break below will add further pressure. In addition, prices trade below 10 SMA, which indicates price weakness and it can fall to 5720-5650.00 in near future.
Alternatively, failure of the breakout could lead to an imminent consolidation between 5835-6050-6120.
Therefore, traders should be careful that it breaks 5825 or does not in order to a fresh sell.
Commodity Samachar
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