Oil prices closed near $71, marking their highest level in two weeks, driven by technical factors and rising natural gas prices.
West Texas Intermediate (WTI) crude stayed above its 100-day moving average, a key technical indicator that encouraged more buying activity. According to data from Bridgeton Research Group, algorithmic traders switched to a net-long position in Brent crude on Monday, after being in a short position since mid-October.
The price increase was also fueled by a forecast of colder-than-usual weather, which sent natural gas futures soaring by 20%. This was the largest gain since the contract began trading in 2012. Tightness in the natural gas market could boost short-term oil demand, especially as overall demand expectations remain modest.
“Cold weather and geopolitical risks pushed traders to take long positions, and rising prices drew in trend-following traders,” said Bart Melek, global head of commodity strategy at TD Securities.
Despite the recent gains, the market remains constrained, weighed down by concerns about a potential supply glut in 2025 and ongoing geopolitical tensions in the Middle East. Traders are also closely monitoring the upcoming inauguration of Donald Trump in January to see how the new administration could affect crude oil supply and demand.
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