Oil flat at $71 despite dismal economic outlook for 2024

• WTI Oil near $71 on Tuesday on reports a Red Sea tanker was attacked by Houthi rebels.
• Oil outlook looks bleak for 2024 as oversupply is too big to get matched anytime soon. 
• The US Dollar (Index) weaker ahead of US Inflation and Fed’s last meeting for 2023.

Oil prices are jumping higher for December on reports a Red Sea tanker was seized by Houthi rebels after a missile attack. Though, the heightened risk and threat in the region is just a small counterweight against the massive oversupply in the Oil markets. With OPEC+ still remaining unable to put in place fix and firm supply restrictions, the Oil faucet is wide open and is dumping far more Oil than needed into global markets. 

Meanwhile, the US Dollar (USD) is easing and is retreating below 104 in the US Dollar Index (DXY). The easing comes with traders bracing for another decline in US inflation, which will be printed later this Tuesday. The number comes ahead of the last Federal Reserve meeting for 2023 which will take place on Wednesday. 

Crude Oil (WTI) trades at $71.83 per barrel and Brent Oil trades at $76.40 per barrel at the time of writing. 

Oil news and market movers: US floods markets

• ABC reports Houthi rebels out of Yemen have attacked a Red Sea tanker in the region. 
• Several banks are or have issued their forecasts for 2024, and the economic outlook looks very bleak with lower growth across the board. This means less demand for Oil to come even further in 2024.
• Despite the small uptick on the back of geopolitical tensions flaring up this Tuesday, Brent crude still resides near a five-month-low.
• The American Petroleum Institute (API) is due to release its weekly stockpile change at 21:30 GMT. Previous number was for a build of 594,000 barrels. No forecast pencilled in. 

Oil Technical Analysis: Even 2024 looks awful

Oil prices are seeing more dark clouds being formed for its performance in the coming weeks and months. Several banks are issuing warnings on global growth concerns, which is of course correlated with the demand for Oil. With these negative bearish outlooks and the current surplus buildup, a return to $90 for Crude looks to be out of the question for some time in case no other events take place that might trigger a supply issue. 

On the upside, $80.00 is the resistance to watch out for. Should crude be able to jump above that again, look for $84.00 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93.00 could come back into play.

On the downside, the soft floor near $74.00 got broken and is gone. Now, $70.00 is trying to salvage the situation, though it has been breached already on Thursday and Wednesday. Watch out for $67.00, which aligns with a triple bottom from June, as the next support level to trade at. 

US WTI Crude Oil: Daily Chart