USOIL – Weekly Chart
The price of USOIL has rallied from a base near $67 and has moved above $74 on the weekly level. That could set up further gains this week and potential short-covering.
Energy executives surveyed by the Dallas Federal Reserve said they have become mildly optimistic about business activity improving but with oil prices to remain stagnant this year.
Executives from 124 oil and gas firms said they expect WTI crude oil to cost $69 a barrel this summer and $71 at year-end. The policy from mid-December may turn out to be wrong, and the lower underlying holding oil may be shaken off.
Oil prices were boosted by a New Year’s address from Chinese Premier Xi Jinping, who gave traders optimism about demand in the year ahead.
“China just is unceasing at this point in terms of their announcements about trying to stoke economic activity, and the market’s taking note,” said John Kilduff at Again Capital.
China announced some new measures to boost growth this week, including a surprise move to raise wages for government workers and a sharp increase in funding from ultra-long treasury bonds. The additional funding will be used to spur business investment and consumer-driven initiatives.
Oil is gaining further support from an expected increased demand for heating oil after forecasts for colder weather over the winter season.
“Oil demand is likely benefiting from cold temperatures across Europe and the US,” said UBS analyst Giovanni Staunovo. Snow has hit parts of Europe and the UK as the new year arrived and could deplete energy reserves.
Incoming President Donald Trump may overturn a decision by President Biden to ban new oil and gas fields but may have added to supply fears.
The coming week will test the recent rally in oil, and the target ahead would be a move through $75 to open up the $80-83 cycle highs.