The better-than-expected Caixin Manufacturing PMI data from the Chinese economy released today helped cap the massive two-day sell-off in WTI Crude Oil Futures (NYMEX: CL), which saw the commodity slump over 7% in the two trading sessions.
The strong bearish sentiments towards the oil futures were due to the disappointing data from the API, which showed stock for the last week increased by 5.202 million barrels against the expected decline of 1.220 million barrels, raising concerns of a potential excess supply of the commodity. The API data and surprisingly positive labour data from the US exacerbated the bearish concerns initiated by the weaker-than-expected NBS manufacturing PMI data from China, which showed that the manufacturing PMI for May declined to 48.8 against the expected expansion to 49.4.
Technical
The 4H chart shows that the oil futures found support around the $67/BLL mark following the tow-day massive sell-off, which helped the futures break out of an ascending wedge trading pattern formed. The oil futures recently broke above the daily pivot point, which could signal the presence of buyers. Thus, the bulls could be confident in their pursuit of higher grounds, with the $69.48/BLL price level acting as a significance level for the charge higher. The fall of the $69.48/BLL resistance level would bring the $71.77/BLL resistance level into play.
However, the appearance of the bearish pin bar could suggest the bears could be getting the time on to shine on the near horizon. Therefore, the bears could look to push the oil futures below the daily pivot point, which would bring the $67.01/BLL and $64.95/BLL support levels into play.
Summary
The oil futures are currently experiencing a strong bearish sentiment with the recent China and US economic data, surprise oil stock build-ups and the bets on a potential rate hike from the Fed. However, the progress in the debt ceiling talks and the OPEC+ meeting due on the 4th of June 2023 have provided some support to the oil futures. Nevertheless, oil traders should keep a keen eye on the economic calendar, including the US manufacturing PMI, which could gauge the short-term direction of the futures ahead of the US NFP data tomorrow.
Sources: TradingView, Barchart, Dow Jones Newswire.
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