- WTI Oil jumps over $79 in steep Friday rally.
- Oil traders are seeing bullish signals as US macroeconomic data points to a recovery and OPEC looks set to lengthen its production cuts.
- The US Dollar Index is back above 104.00, though it is unable to clearly break away from a pivotal level.
Friday saw a surge in oil prices, hovering near $79 following the US opening bell, capping off what has been a lucrative week for the commodity. Investors are closely monitoring for confirmation regarding OPEC’s intention to extend ongoing production cuts into the second quarter. These voluntary cuts have played a pivotal role in supporting current oil price levels.
Concurrently, the US Dollar Index (DXY) remains within a narrow trading range despite the release of significant economic data and a barrage of comments from various US Federal Reserve speakers throughout the week. Market tension is palpable as Fed officials discuss the timing and potential number of upcoming interest rate cuts, while recent inflation data hints at the likelihood of a rate hike to counteract potential second-round effects on inflation.
As of the latest update, WTI Crude Oil is trading at $79.04 per barrel, while Brent Oil is at $82.91 per barrel.
Oil news and market movers: JPMorgan calls for OPEC unwind
According to Christyan Malek, the head energy strategist at JP Morgan, June appears to be the opportune time for OPEC to initiate a reduction in its supply cuts. Notably, Middle Eastern oil refineries have acquired substantial quantities of Oman and Kuwait Crude, diverting it from its typical overseas destinations.
The latest US stockpile data unveiled a rapid replenishment pace, as indicated by reports from the American Petroleum Institute and the Energy Information Administration, showcasing a significant stock build.
Anticipated at 18:00 GMT, the weekly Baker Hughes Oil Rig Count is set to be released, with the previous reading standing at 503. OPEC finds itself compelled to extend the existing production cuts to avert a pronounced downward spiral in crude prices.
Adding to the dynamics, a considerable portion of Libya’s oil supply has returned online following the resolution of protests at one of its major oil fields.
Oil Technical Analysis: OPEC could cements its support level here
The resilience of oil prices is anchored in the belief among traders that OPEC will take decisive actions to sustain the current price levels. However, this reliance carries an element of uncertainty given the voluntary nature of the current production cuts by OPEC countries, with confirmation contingent on actual export figures. To truly influence the market, OPEC might need to not only extend but also deepen these production cuts.
Optimistic oil investors are eyeing the double top around $79.66, anticipating a breakthrough toward $80.00. Beyond this point, a significant upward trajectory opens up, reaching as high as $86.90, representing a potential gain of nearly 10%. Further hurdles may emerge around $89.64 just shy of $90, acting as a potential barrier before the ascent towards $100.00.
Conversely, on the downside, the initial support comes from the 200-day Simple Moving Average (SMA) at approximately $77.72. Following closely are the 100-day and 55-day SMAs, positioned near $76.25 and $74.83, respectively. Reinforced by the crucial level at $75.27, the downside appears well-fortified and resistant to significant selling pressure.
