At the commencement of trade on Friday, crude oil maintained a stable position following a decline overnight. This was attributed to the US Dollar’s resurgence, which was buoyed by optimistic US data.
The number of people filing for unemployment benefits exceeded projections for the previous week, totaling 264,000 instead of the anticipated 245,000. However, the Producer Price Index (PPI) showed a decrease in inflationary pressure, registering at 2.3% rather than the expected 2.5%, and down from the previous rate of 2.7%.
The labour market seems to be loosening up based on the jobs data, and there are expectations that consumer price pressures may decrease in the future as a result of the PPI figures.
The economic data suggests that the Federal Reserve will likely halt its cycle of interest rate hikes at the upcoming Federal Open Market Committee (FOMC) meeting in June. These two data points reinforce this viewpoint.
The markets for futures and overnight index swaps (OIS) are indicating a potential reduction by the Federal Reserve in September, despite remarks made by Neel Kashkari, President of the Minneapolis Federal Reserve, which suggest that although there has been a decline in the Consumer Price Index (CPI), it still remains at an elevated level.
The US Energy Information Agency (EIA) released data on Wednesday which caused a decline in crude prices. The data indicated an increase in inventory of 2.951 million barrels for the week ending May 5th, as opposed to previous predictions of a decrease of 917k barrels.
The White House declared earlier this week that the potential replenishment of the Strategic Petroleum Reserve (SPR) could commence in the upcoming month. This decision was made in response to inflationary pressures caused by higher energy costs resulting from the Russian invasion of Ukraine, which had previously necessitated the use of the SPR.
WTI CRUDE OIL TECHNICAL ANALYSIS
This week, WTI experienced a high of 73.89 on Wednesday, but failed to surpass the breakpoint resistance at 73.93.
The cluster of Simple Moving Averages (SMA) between 75.15 and 76.45 may act as a barrier to further progress, as those levels could offer resistance in the near future. This is due to the presence of four daily SMAs – the 21-, 34-, 55- and 100-day – which are all within that range.
The convergence of the aforementioned simple moving averages (SMAs) may indicate a likelihood of continued range trading in the immediate future.
Possible academic rephrasing: Potential support levels for the asset include the breakpoints located at 66.82, 66.12, and 64.36, as well as the prior lows at 63.64 and 62.43, which represent lower levels of possible support.