Today, prices for U.S. crude oil benchmark West Texas Intermediate (WTI) are showing some resilience, holding above the psychological level of $67.00. This has attracted buyers, effectively breaking a three-day losing streak.
Price support comes from the OPEC+ decision to delay increasing supply until April and extend the complete phase-out of production cuts until the end of 2026. Additionally, ongoing geopolitical risks, including the conflict in Ukraine and the overthrow of Syrian President Bashar al-Assad by rebels, provide a tailwind for crude oil prices.
Furthermore, signs of economic resilience in the United States and optimism that the expansionist policies of U.S. President-elect Donald Trump will boost fuel demand also support crude oil prices. However, Saudi Arabia's decision to lower prices for Asian buyers has raised concerns about slowing demand from China, the world's largest oil importer. Adding to this, fears of a potential supply glut could limit the upside for crude oil prices.
Moreover, according to the Baker Hughes report, the number of oil and gas drilling rigs in the U.S. last week reached its highest level since mid-September. This signals increased production from the world's largest crude oil producer and could further cap price gains.
Given these factors, traders are advised to exercise caution and wait for clear buying signals before expecting a sustained recovery in oil prices in the near future. This is especially pertinent as, from a technical perspective, oscillators on the daily chart remain in negative territory.
As such, it is premature to talk about a confident recovery in prices.