By Bhavik Patel

2022 was roller coaster year for crude oil. At the start of the year Russia invaded Ukraine which saw price rush till $130 before retracing back to $80 and in the second half of the year remained between $70-$90. Now crude is at the same price which it was at the start of the year 2022. According to IEA and OPEC forecast, demand is expected to increase in 2023. The EU will need to buy more gas to refill its storage and it will continue using oil products that it no longer buys from Russia. China is reopening and most observers expect a rebound in oil and gas demand to come sooner rather than later. China’s oil consumption is expected to jump by 800,000 barrels per day (bpd) this year to a record 16 million bpd. Following the initial exit Covid wave after the strictest curbs were lifted, Chinese oil demand is set to rebound from the second quarter onwards.

Crude has resistance around 6700 as previous peak was around that level before correcting till 6000. Once again crude is near to its resistance zone but momentum oscillator still looks strong as RSI_14 is comfortably trading at 58. After mid-November, first time crude has closed above its 50 day moving average which shows strength and we believe crude will trade positively next week based on trend strength indicator. Any dip around 6500 is good opportunity to go long with stoploss of 6350 and expected target of 6800.

(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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