Crude Oil, WTI, EU Summer Travel, OPEC, Fed – Talking Points:
- Crude oil prices climbed despite downturn in market sentiment
- Traders focused on EU summer travel lift, OPEC commentary
- WTI appearing to trade within the confines of a Rising Wedge
Crude oil prices advanced over the past 24 hours, managing to brush aside a deterioration in market sentiment during the Wall Street trading session. The growth-linked commodity can be quite sensitive to the broader underlying fundamental dynamics driving global stock markets. Developments on Monday likely pointed to specific supply and demand factors for energy prices.
For one thing, the European Commission announced that the EU is planning on easing restrictions for vaccinated travelers over the summer. This likely brought up prospects of future demand for crude oil. This is as Iraq’s oil minister, Ihsan Abdul Jabbar, noted that oil could probably remain around US$65 a barrel. The nation is the second-largest producer within OPEC.
Heading into the remaining 24 hours, energy prices are eyeing the weekly inventories report from the American Petroleum Institute (API). The outcome will be compared to what official Department of Energy (DoE) data points to on Wednesday. Last week’s report showed that crude oil inventories unexpectedly climbed by about 90,000 barrels.
San Francisco Federal Reserve President Mary Daly, who is a voter on the FOMC this year, will be speaking later today. She recently made comments that she wants to see a ‘gradual underlying inflation pickup’. Given recent dovish Fed rhetoric, similar commentary from her could continue cooling monetary policy tapering expectations. If that pressures Treasury yields and the US Dollar, then oil could continue climbing.
Crude Oil Technical Analysis
On the 4-hour chart below, WTI crude oil futures appear to be trading with a cautious upside focus in the near term. Prices seem to be pointing higher within the confines of a Rising Wedge chart pattern. The 50-period Simple Moving Average (SMA) could act as key support in the event of a turn lower. Resuming the uptrend entails a push above April highs. Keep a close eye on RSI. The turn lower in late April lower followed the presence of negative divergence, a sign of fading upside momentum.
WTI Futures 4-Hour Chart
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
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