Crude oil surges higher

Crude oil shot higher in early trade this morning. Front-month WTI has added close to 3% and has surged back above $75 per barrel. This takes the price back up to levels last seen on 10th October, and the move adds legs to the current rally which began before the Christmas break. Credit for the latest strong upside move is being given to the freezing weather conditions across Europe and in parts of the US. The situation isn’t improved by concerns of low inventories. At the same time, this three week rally has seen the daily MACD push up into territory last seen in early July, when front-month WTI was trading above $83. Prices subsequently fell back sharply. While the immediate fundamentals are quite different now compared to the summer, it shouldn’t be a surprise to see some sort of pullback and consolidation. At the same time, markets can continue to run at overbought, or oversold, levels for much longer than often seems reasonable.