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WTI rebounds on $46 handle as risk recovers in thin holiday US trade

  • WTI has rebounded after a battering that followed a number of political headlines that threw risk appetite into a tailspin on Christmas Eve's shortened session. 
  • WTI is currently trading on the 46.00, recovering from 42.54 the lows.

Risk has rebounded as the US markets open again, albeit with thinner volumes given the holiday season. There has been some support for the riskier asset classes, such as oil but given the dominating circumstances which has sent the price down by 40% since its peak on 3rd Oct, recoveries may be shortlived. There are still concerns about heavy global crude output and fears of a deteriorating economic backdrop that weighs on demand for oil.

Looking forward

"Looking forward we continue to see the risk/reward skewed to the upside at current levels, but concede that a sharp recovery is looking less likely and any meaningful recovery will likely have to wait until mid-January. The market will have to wait for the recent fundamental changes to take hold and for the technical damage to correct itself in time,"

analysts at Rabobank explained.

WTI levels

Support levels: 42.48 40.95 40.50

Resistance levels: 46.42 47.12 47.95

RSI leans bullish with the price correcting. The spike to the downside was testing S1 located at 43.01 on the weekly time frame which has left a bullish downside wick with sellers drying up. R1 is located at 50.13 as an initial target above the pivot which will then bring in 52.35 to pare back last week's losses. Bulls need to get back above 51.30, as the 50% level of the 2016 lows to recent peak's range. To the downside, 42.14 is the initial target.

 

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