Oil Prices Surge: WTI Targets $75 Amid Policy and Demand Optimism
WTI Crude Oil surged to $73.24 per barrel, marking its highest level in over two months, as investors bet on increased global policy support to boost economic growth and fuel demand.
The market posted its second consecutive weekly gain, buoyed by rising liquidity after the holiday season.
Economic activity in Asia, Europe, and the U.S. showed signs of stagnation as manufacturing PMIs for December reflected subdued growth expectations. Analysts at Capital Economics noted that Asian central banks are likely to adopt further policy easing to combat slow GDP growth and below-target inflation. This sentiment aligns with hopes that the Federal Reserve will cut interest rates in 2025 to revive U.S. economic momentum.
China, the world’s second-largest oil consumer, is central to the bullish narrative. President Xi Jinping’s commitment to proactive policies to stimulate growth has renewed optimism for demand recovery. StoneX analyst Alex Hodes emphasized that China’s economic trajectory remains pivotal, with anticipated government stimulus fueling consumption in 2025.
Key Market Drivers: Inventory and Geopolitics
Saudi Arabia is expected to raise crude prices for Asian buyers in February, tracking a rise in Middle Eastern benchmark prices. This potential price adjustment signals stronger demand dynamics in Asia. Meanwhile, U.S. gasoline and distillate inventories showed a significant jump last week as refineries increased output, though overall fuel demand hit a two-year low. Crude stockpiles dropped by 1.2 million barrels to 415.6 million barrels, underperforming analyst forecasts of a 2.8-million-barrel draw.
Geopolitical uncertainty surrounding Donald Trump’s upcoming inauguration on January 20 is also weighing on oil markets. Potential tariffs on China could reshape global demand patterns, influencing oil price trajectories throughout the year.
WTI Crude Oil Technical Outlook: January 3, 2025
WTI Crude Oil consolidates near $73.24 following a robust breakout above $71.75, now a pivotal support level. The 4-hour chart highlights bullish momentum, with prices maintaining strength above the 50-day EMA at $71.00. Immediate resistance stands at $73.73, followed by $74.81 and $75.95, which could serve as key upside targets.
On the downside, critical support levels include $72.80, $71.75, and $70.75, providing a cushion against potential bearish reversals. The RSI at 68 indicates strong buying activity but suggests caution as the market approaches overbought territory.
A breakout above $73.73 could propel prices toward $74.81, while a breach below $71.75 might lead to a short-term pullback.
Key Insights:
Bullish Momentum: WTI maintains strength above $71.75, eyeing $73.73 resistance.
Support Levels: Key downside supports are $72.80, $71.75, and $70.75.
Overbought Conditions: RSI at 68 signals caution despite strong buying interest.
