Crude Oil Update - Prices Supported by Oversold Technical Factors

March 03, 2024

Trend: Short-term = Neutral; Long-term = Bullish

  • After numerous failed attempts, oil was finally able to break through that very strong resistance level at 78.00
  • Closed the week just under 80.00, a four-month high
  • If it can hold above this level, a run to 85.00 is possible
  • Longer-term supply & demand dynamics are bullish for oil
  • One thing to watch, if energy prices keep rising, it will push inflation higher & that would halt any Fed rate cut plans

We  like energy going forward.

On the demand side China is starting to open up, and India’s fuel consumption in February hit an over 24-year high. On the supply side, governments imposing windfall taxes, tight regulations, and allowing no new drilling permits, are all major disincentives for producers. Capital expenditures in the oil sector are at 35-year lows and that lack of investment in that sector is going to cause a serious supply problems longer-term.

We are all for greener energy, but we need to be realistic on the time frame…we are going to need fossil fuels for much longer than these governments are projecting.

Longer-term we expect oil to have a strong next couple of years, certainly seeing $100 & potentially hitting $150 or higher in the next few years.

In the near-term, if we have a recession, that would hit demand and likely push prices lower. If that happens, it will present another great buying opportunity.

Subscribers get the up to date picture, including BUY & SELL signals in the weekly issues of the Trend Letter.  

 


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