It has been a rather challenging year for oil. From talks of tighter market conditions to slowing economies across the globe, there were arguments to both sides of the story. And that is also reflected somewhat in price action, with the high for WTI crude being at $95 at the end of September before sinking back lower in the past two months as markets step up rate cuts pricing.
WTI crude oil weekly chart
The fortunate thing for oil prices is that buyers have stepped up when it mattered most. At each point during the course of the year the 200-week moving average (green line) was tested, they managed to keep a defense of that. And even when things were looking rather gloomy last week, they managed to barely turn it around towards the end.
And so for this year, oil is still down over 7% but if not for the defense at the 200-week moving average seen above, it really could’ve been much worse.
So, what’s next as we move towards 2024?
The outlook is mostly leaning towards bearish side amid economic and energy-transition headwinds. As such, OPEC+ will have an important role in trying to at least keep a floor on prices with deeper production cuts. That being said, if economic conditions aren’t as bad as feared, that could still stimulate higher demand and keep the market tight. That is one consideration to be mindful about, especially since lower prices will also help to lift demand conditions in general.