The recent rally in oil prices was driven by supply curbs from Russia and Saudi Arabia, as well as shrinking US crude stockpiles. The rally in oil prices has also been aided by a stall in the dollar's rally, making commodities priced in the currency cheaper for buyers. However, there are growing demand risks in China and the US.
Economic data from China, including downbeat consumers and struggling exports, has had an impact on oil prices. Last week, oil fell due to concerns about inflation risks in the US and the smaller-than-expected cut to the benchmark lending rate by Chinese banks. The annual Jackson Hole symposium in Wyoming, featuring speakers such as Federal Reserve Chair Jerome Powell, may provide clues on the direction of interest rates and could potentially have an impact in the short term outlook for crude oil.
On the technical side the price of crude oil had made a valid break above the weekly downward trendline about a month ago and is currently trading just above the 23.6% of the daily Fibonacci retracement level almost exactly on the resistance of the 20 day simple moving average. The 50 day moving average is still trading well above the 100 day moving average indicating that the overall bullish momentum is still in effect while the Stochastic oscillator is back in “neutral” levels after being oversold in last week’s correction move.
In the event that the price continues to make bullish movement we might see a retest of the last high of around $84 which is also the psychological resistance of the round number whilst in the event of a further correction to the downside then it is possible to see some support around the $78 price area which is just above the 38.2% of the daily Fibonacci retracement as well as the lower band of the Bollinger bands.
Economic data from China, including downbeat consumers and struggling exports, has had an impact on oil prices. Last week, oil fell due to concerns about inflation risks in the US and the smaller-than-expected cut to the benchmark lending rate by Chinese banks. The annual Jackson Hole symposium in Wyoming, featuring speakers such as Federal Reserve Chair Jerome Powell, may provide clues on the direction of interest rates and could potentially have an impact in the short term outlook for crude oil.
On the technical side the price of crude oil had made a valid break above the weekly downward trendline about a month ago and is currently trading just above the 23.6% of the daily Fibonacci retracement level almost exactly on the resistance of the 20 day simple moving average. The 50 day moving average is still trading well above the 100 day moving average indicating that the overall bullish momentum is still in effect while the Stochastic oscillator is back in “neutral” levels after being oversold in last week’s correction move.
In the event that the price continues to make bullish movement we might see a retest of the last high of around $84 which is also the psychological resistance of the round number whilst in the event of a further correction to the downside then it is possible to see some support around the $78 price area which is just above the 38.2% of the daily Fibonacci retracement as well as the lower band of the Bollinger bands.