Crude oil prices stabilized as market sentiment remained relatively positive ahead of Christmas

• Oil prices moved largely sideways on Monday, giving up early gains from the Asian session.
• Markets are lifting equities and commodities following the soft PCE inflation report.
• The US Dollar Index remains flat, hovering near a two-year high.

Crude oil prices held steady on Monday, with WTI trading just above $69, showing potential for further gains as market sentiment improved, buoyed by a positive trend in Asian equities. The market optimism followed Friday’s release of the US Personal Consumption Expenditures (PCE) inflation data, which renewed the Federal Reserve’s expectations for two or more rate cuts in 2025. This outlook provides an ideal catalyst for a “risk-on” environment, benefiting equities and commodities.

The US Dollar Index (DXY), which tracks the USD against a basket of currencies, remained relatively unchanged, showing no significant movement ahead of the Chicago Fed National Activity Index for November and the December Consumer Confidence report. With a risk-on sentiment prevailing, the US Dollar is expected to stay flat. Traders are advised to keep positions light, as any movements may be short-lived, with potential for quick profit-taking before the Christmas holiday.

Oil Technical Analysis.

Crude oil prices may experience a slight increase, driven by broader market optimism. Seasoned traders are aware that, as we approach January, the general strategy is to maintain smaller positions and consider taking profits, potentially within the same trading day. This suggests that any potential rally in oil prices over the coming days should be approached with caution, as it could be short-lived.