December crude oil futures rose this week, driven higher by oversold technical conditions, uncertainty over the Fed’s timing of its plans to taper monetary stimulus and a smaller-than expected rise in crude oil supplies.
According to a few technical indicators and oscillators, crude oil had reached oversold levels. Reading these charts is not an exact science, however, traders respect the numbers because they often are associated with surprise rebounds and bear-traps. Given the prolonged move down in terms of price and time, profitable short-sellers want to avoid getting caught short on the wrong side of the market at current price levels. This helped crude oil build a little support base on the daily chart which could turn into something bigger on the weekly chart if momentum begins to shift to the upside.
Uncertainty over the Fed’s timing of its plans to taper its $85 billion in monthly monetary stimulus could also be underpinning crude oil. Traders may feel they have successfully priced in a stronger dollar due to the possibility the Fed will begin tapering its stimulus as early as December rather than waiting for April 2014. A stronger-than-expected Gross National Product figure on November 7 failed to give prices a boost, but the latest U.S. Non-Farm Payrolls data, set to be released on Friday, November 8, is expected to be a market moving event.
This week, oil futures rose following weekly data from the U.S. Energy Information Administration…