Crude Oil Dips After Record-Breaking Year as US Dollar Sidelined. Where to for WTI in 2022?

Crude Oil, OPEC+, China PMI, Hang Seng Index, HSI, US Dollar - Talking Points

• Crude oil weakened today after making a monthly high overnight
• APAC equities were subdued but Hang Seng outperform after data beat
• The OPEC+ meeting is due next week.What will be the impact for WTI prices?

Crude oil slipped today, but it is set to have had its’ best annual rally since 2009.

The market expects that at the OPEC+ meeting on the 4th January, that they will stick to their plan of adding 400,000 barrels per day.

The pull back today comes after 7 trading days of rallies. Overnight, China announced a reduction for oil import quotas for the start of 2022.

Other energy commodities were slightly lower while iron ore had a slight blip up.

Chinese data was better than expected today with the manufacturing purchasing managers index (PMI) increasing from 50.1 to 50.3 against 50.0 expected. The non-manufacturing PMI increased from 52.3 to 52.7 beating forecasts of 52.0.

Hong Kong’s Hang Seng Index (HSI) was more than 1% higher while mainland Chinese equities were only marginally higher. Japanese and Australian equites were slightly lower after a negative lead from Wall Street.

At the time of going to print, the S&P 500, Dow and Nasdaq futures were all looking at a slightly negative start.

Currency markets remained subdued throughout the Asian session with the US Dollar index (DXY) only fractionally higher.

Most exchange traded markets will be closed or closing half day, and there is no data out in North America today.

Crude Oil Technical Analysis

WTI crude has struggled to overcome the 55-day simple moving average (SMA) in recent sessions as it made a new high for December.

This move has seen volatility slowly increase going into year-end, as illustrated by the widening of the 21-day SMA based Bollinger Band s.

Support could be provided at the previous lows and pivot points of 74.96, 74.76, 73.34 and 66.12.

On the topside, if the 55-day SMA is overcome, resistance could be at the previous highs of 77.44, 79.33, 81.81, 84.97 and 85.41.

Chart created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter