Oil Rally Breaks Crude Out of Tight Range With Technical Support

By Bloomberg

Jan 03, 2025

image is BloomburgMedia_SPHH12T1UM0W00_03-01-2025_05-00-09_638714592000000000.jpg

Workers stand on top of a tank at a Colonial Pipeline Inc. facility in Avenel, New Jersey, U.S., on Wednesday, May 12, 2021. Motorists across a broad swath of the U.S. East Coast and South are struggling to find gasoline and diesel as filling stations run dry amid the unprecedented pipeline disruption caused by a criminal hack. Photographer: Mark Kauzlarich/Bloomberg

(Bloomberg) -- Oil has broken out of a tight trading range that it’s been stuck in for months, with a breach of a key technical threshold and shrinking US crude stockpiles helping to drive prices higher.

Brent was steady near $76 a barrel after a four-day rally that’s pushed futures to the highest level in more than two months. West Texas Intermediate was above $73. Nationwide crude inventories remain well below the seasonal average after stockpiles dropped for a sixth straight week.

A jump by both benchmarks above their 100-day moving average also spurred algorithmic buying, helping to break crude out of the roughly $6 range it’s been in since mid-October. Oil is also on track for a second weekly gain.

“The question now is whether this can kick toward the 200-day moving average,” said Chris Weston, head of research for Pepperstone Group Ltd. “That may need economics to improve.”

The outlook for 2025 remains uncertain, however, with expectations for a glut, the possible revival of idled OPEC+ production and lackluster demand from top importer China. The return of Donald Trump to the White House at the end of this month also adds a level of unpredictability for global markets.

By Yongchang Chin