USOIL, daily
Crude oil prices are still in free fall even after signals that central banks are stepping in to help troubled lenders in the U.S. and Europe. Speculators had been building their long position in the oil market on the back of expectations that there will be an increased demand recovery from China following the reversal of its zero-covid policy, together with the view that Russian oil supply will edge lower.
For the time being there are two scenarios that could help boost the price of oil. The first would be an OPEC response by stepping in and announcing further supply cuts in order to try bringing some stability to the market. But this cannot just happen overnight or take such a decision based on a very short reaction of the market. Probably they will wait for the dust to settle and take action on their next meeting which will take place in early July. The second scenario would be the US Department of Energy(DoE) announcing that they will be refilling their SPR (Strategic Petroleum Reserve) which is at its lowest level since the 1980’s. Previously the US Department of Energy (DoE) said that they would look to refill the SPR if WTI traded around US$67-72/bbl which is the case right now.
On the technical side the price of Crude oil on the daily chart is “walking the band” ( touching the Bollinger bands in consecutive sessions) indicating great push by the bears in high volumes. It is trading at a 15 month low with no signals of correcting to the upside just yet while the 50 day moving average crossed below the 100 SMA indicating the bearish momentum is going strong.
Crude oil prices are still in free fall even after signals that central banks are stepping in to help troubled lenders in the U.S. and Europe. Speculators had been building their long position in the oil market on the back of expectations that there will be an increased demand recovery from China following the reversal of its zero-covid policy, together with the view that Russian oil supply will edge lower.
For the time being there are two scenarios that could help boost the price of oil. The first would be an OPEC response by stepping in and announcing further supply cuts in order to try bringing some stability to the market. But this cannot just happen overnight or take such a decision based on a very short reaction of the market. Probably they will wait for the dust to settle and take action on their next meeting which will take place in early July. The second scenario would be the US Department of Energy(DoE) announcing that they will be refilling their SPR (Strategic Petroleum Reserve) which is at its lowest level since the 1980’s. Previously the US Department of Energy (DoE) said that they would look to refill the SPR if WTI traded around US$67-72/bbl which is the case right now.
On the technical side the price of Crude oil on the daily chart is “walking the band” ( touching the Bollinger bands in consecutive sessions) indicating great push by the bears in high volumes. It is trading at a 15 month low with no signals of correcting to the upside just yet while the 50 day moving average crossed below the 100 SMA indicating the bearish momentum is going strong.