Oil settled higher after slipping to the lowest intraday since early December with technical indicators signaling the commodity was oversold.
West Texas Intermediate managed to achieve its first positive finish in four sessions. Rising crude inventories left the market vulnerable to a downshift in broader sentiment, briefly pushing oil prices below the lower Bollinger band. Crossing the bottom band is a technical signal that indicates an oversold threshold has been breached, prompting traders to throttle back selling.
Among the factors supporting crude, a major earthquake in Turkey halted oil flows to the Ceyhan export terminal, which ships out more than 1 million barrels a day, and a technical fault at Norway’s giant Johan Sverdrup field lowered production there.
Prices endured a bumpy January, rising on China’s end to its Covid Zero policies and falling on the US’s inventory builds. Continued uncertainty of how both countries will fare is fueling much of the consternation among investors. Long term, China is the most important factor as the scale and speed of its reopening will be key for traders, but other factors are altering the short-term outlook.
“I can be max bullish based on a bunch of forward-looking items,” but then there are stock builds to consider, said Vikas Dwivedi, global oil and gas strategist at Macquarie. “That’s the tension right now.”
--With assistance from Julia Fanzeres.
©2023 Bloomberg L.P.
