On Tuesday, crude oil experienced a slight increase following significant advancements in the North American market. This followed the announcement of a plan to purchase 3 million barrels of oil to replenish the depleted supplies at the Special Petroleum Reserve (SPR).
Currently, the WTI futures contract is located in the vicinity of US$ 71.50 per barrel, whereas the Brent contract has slightly surpassed US$ 75.50 per barrel.
The rally proceeded with minimal hindrance despite the release of underwhelming Chinese economic data indicating that the lifting of Covid-19 restrictions has not yielded the desired economic growth anticipated by both the government and the market.
The industrial production of China for the period ending April registered a 5.6% year-over-year growth, which is lower than the anticipated growth rate of 10.9% and the previous growth rate of 3.9%.
During the aforementioned period, retail sales were recorded at 18.4%, which is lower than the previously projected figure of 21.9%. This also indicates a decrease from the previously observed rate of 10.6%.
Fixed asset investment, excluding rural and property investment, fell below expectations at 4.7%, while property investment also missed estimates by printing at -6.2%. The data shows a strong base effect resulting from Covid-19 lockdown restrictions that were in place during the same period last year.
During the North American session, three representatives of the Federal Reserve presented three distinct viewpoints. Among them was Austan Goolsbee, the recently appointed President of the Chicago Fed, who expressed a somewhat dovish sentiment by indicating his disinterest in the Fed’s most recent rate increase.
Atlanta Federal Reserve President, Raphael Bostic, expressed that he would maintain the current interest rates if a vote was held today. However, Minneapolis Federal Reserve President, Neel Kashkari, believes that the Federal Reserve must continue its efforts to reduce inflation.
Despite the short end of the curve being mostly unchanged, the Treasury yields beyond ten years added only a few basis points. As a result, there has been a slight decline in the value of the US Dollar.
Equity markets displayed minimal reaction towards the commentary, however, the primary concern now lies on the matter of the debt ceiling. This issue has garnered significant attention.
Kevin McCarthy, the Speaker of the House, has indicated that a resolution is not yet imminent. Meanwhile, the Treasury Secretary underscores the significance of June 1st as the deadline before the United States faces the dire possibility of default.
Despite the prevailing uncertainty, gold remains a viable option as a safe haven, with its trading value hovering around US$2,010 per ounce. The TOPIX equity index in Japan hit a peak not seen since 1990; however, the other equity indices across the APAC region displayed mixed trends without any significant fluctuations.
Following the release of employment statistics in the United Kingdom and gross domestic product (GDP) data in the European Union, the United States is due to release retail sales figures while Canada will be informed of the most recent consumer price index (CPI) readings.
WTI CRUDE OIL TECHNICAL ANALYSIS
WTI is currently in the process of consolidating within its range, following a recent decline last week.
Potential support levels for the asset in question include the breakpoints located at 66.82, 66.12, and 64.36, as well as lower levels at the prior lows of 63.64 and 62.43.