The WTI Crude Oil Futures (NYMEX: CL) are easing in the Thursday trading session after a three-day rally fuelled by bets on tightening supplies, increased demand and improved demand outlook for the year. The futures have rallied over 3% for the week after Saudi Arabia’s Energy Minister’s stern warning to oil short sellers left the market speculating that OPEC+ could be considering further supply cuts in their meeting next month.
The weekly EIA report also showed that the oil demand in the US spectacularly rebounded last week after crude oil inventories declined by 12.456 million barrels against an expected build of 775 000 barrels. The impressive rebound combined with EIA remarks that global oil could exceed supply by 2 million barrels per day by the end of the year also boosted the commodity’s rally. However, the fears surrounding the US debt ceiling in the US continue to weigh on oil investors in the short term.
Technical
The oil futures have formed a rising wedge trading pattern as the bulls look to recover some of the ground lost during the massive selloff earlier this month. The oil futures seem to be settling around a daily pivot point after a three-day rally that saw the futures grow by over 3% for the week. Trader reaction to the pivot point at $74.03/BLL will likely determine the direction of the June US Dollar Index on Thursday.
The bulls could be confident in resuming their impressive rally higher, with the dynamic resistance acting as immediate resistance to any push higher. A break above would bring the $75.22/BLL and $76.88/BLL resistance levels firmly into play. The bears’ push lower could be boosted by a sustained move below the pivot point, with the market firmly keeping a keen eye on the dynamic support and 23.60% Fibonacci retracement level. The fall of the dynamic support level would trigger a selloff towards the $70.72/BLL support level, with the $69.48/BLL support level firmly in sight.
Summary
Oil futures have enjoyed a spectacular rise buoyed by the positive remarks and indicators towards the commodity’s future. However, the US debt talks still weigh on investors’ appetite towards the commodity, as a US default could be catastrophic for the global markets, heavily impacting the demand for the commodity.
Sources: TradingView, Reuters, Trading Economics.
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