- WTI's 50-day moving average stands at $53.50 a barrel -
After enduring a withering downturn, crude-oil prices flirted with a closely watched line in the sand that, if breached, could signal further gains ahead.
West Texas Intermediate crude for February delivery was up $2.39, or 5.2%, to settle at $52.36 a barrel, putting the U.S. benchmark a few percentage points short of its 50-day moving average at $53.50, according to FactSet data and based on the most-active contract.
Moving averages are often watched by analysts and traders as guides to short- and longer term trend changes.
Oil notched a nearly four-year high above $76 a barrel in early October but then tumbled into a bear market, generally defined as a pullback of at least 20% from a peak, back in early November, eventually closing as low as $42.53 on Christmas Eve.
A break above a short-term trend line, meanwhile, is usually seen as an upbeat sign that a shift in the market dynamic may be at hand. If the oil contracts close at around current levels seen Wednesday they would, by at least one measure, exit bear-market territory. Some market participants believe that an asset has exited a bear market when it climbs 20% from its bear-market low. Other industry participants view an asset out of a bear market only when it has reestablished a new high above its most recent peak.
Global benchmark Brent crude oil) also was nearing a move above its 50-day at $62.43 a barrel, with the contract for March closing rising 4.5% on Wednesday to $61.32.
Crude-oil has been tempest tossed since hitting a peak on Oct. 3, with the asset falling alongside equity-market indexes like the Dow Jones Industrial Average and the S&P 500 index amid worrisome signs of weakness in the global economy and a tariff spat between China and the U.S. that has been seen as threatening to hobble long-term demand for crude and its byproducts, if tensions between the world's largest economies were further aggravated.
Those factors appeared to overshadow positive signs in the crude market, including reports that demand remained healthy and as members of the Organization of the Petroleum Exporting Countries, and allies including Russia, announced cuts to oil production.
News that President Donald Trump is eager to strike a trade deal with Beijing has helped to further boost oil prices-perhaps, an ironic development since the 45th U.S. president has been one of the most vocal advocates for lower oil prices in recent months.
Still, market participants cautioned that oil's current uptrend needs to demonstrate further staying power, especially since a Dec.13 run-up, which took WTI prices to a close of $52.58 a barrel, deteriorated miserably.
"From a momentum perspective, testing the 50-day moving average is a positive indication, but we have a lot of potential resistance in particular at the $52 area," Fawad Razaqzada, technical analyst at Forex.com, told MarketWatch.
He said that if WTI can decisively break above $52 a barrel, "we can become more optimistic about the prospect of the continuation of the rally.
Oil-price gains on Wednesday retreated somewhat after data from the U.S. Energy Information Administration showed a smaller-than-expected drawdown in crude stockpiles, but distillates showed a big reduction.