USOIL| Level 74$ will be decisive!

Jan 9

Analyzing the oil market, we see that WTI (West Texas Intermediate) is priced around $72.55 per barrel, while Brent is at $77.71 per barrel. Several key factors are influencing the current oil market scenario.

Saudi Price Reduction: Saudi Arabia's decision to lower the prices of its oil exports to Asia has contributed to a bounce back in prices from the Monday low of $70. This move might increase the competitiveness of Saudi oil in the Asian market, thus impacting the global market.

Decline in Inflation and Oil Demand: The fall in oil prices is welcomed by analysts and fund managers as it could lead to a further decrease in inflation.

Stock Market Dynamics and DXY Index: The steady state of the US Dollar Index (DXY) around 102.00, despite some selling pressures, and the strengthening of US and Japanese stock markets, indicate investor confidence, which could positively affect the oil market.

Geopolitical Tensions: Despite geopolitical tensions, such as the recent elections in Taiwan and ongoing tensions in the Middle East, markets seem to be overlooking these risks, which could keep the oil market stable in the short term.

Russian Compliance with OPEC+ Cuts: Russia is adhering to the production cuts agreed upon in the last OPEC+ meeting, helping to balance the market supply.

Speculations and Realpolitik: Rumors that shipping companies paid fees to Houthi rebels for safe passage in the Red Sea, though denied, demonstrate the market's sensitivity to such news. US Secretary of State Blinken's visit to Israel could have implications for the security of maritime passages and, consequently, the oil market.

US CPI Expectations: With the upcoming release of the US Consumer Price Index (CPI), a further decrease in oil prices could be expected, potentially stimulating demand.

Technical Analysis: The $74 level is pivotal for WTI; we might see a bullish breakout towards $80 or a pullback towards $71. Happy trading to everyone.