Oil price action amidst efforts to control the bank domino effec
Crude oil prices are showing signs of correction in the last 3 sessions 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.’ said Antreas Themistokleous, market analyst in Exness. ‘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 has moved away from the band where historically this has been a sign of correction in the market. It is also trading at a 15 month low while the 50 day moving average crossed below the 100 SMA indicating the bearish momentum is going strong. Of course this does not mean that it could not possibly cross above the 100 SMA in the following sessions.
‘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.’ said Antreas Themistokleous, market analyst in Exness. ‘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 has moved away from the band where historically this has been a sign of correction in the market. It is also trading at a 15 month low while the 50 day moving average crossed below the 100 SMA indicating the bearish momentum is going strong. Of course this does not mean that it could not possibly cross above the 100 SMA in the following sessions.