Fundamental Analysis
Oil Prices Stabilise Following Economic Concerns
On Wednesday, the US saw a decline in capital goods spending, leading to additional pressure on oil prices due to weak risk sentiment spreading from the banking sector, compounded by First Republic Bank's continued slump.
Oil broker PVM's Tamas Varga has attributed the recent oil price decline to weak refinery margins, with heating oil and gasoil as "the main possible culprit for the outsized weakness".
Despite a surprise cut to OPEC production targets this month, worries of a potential recession led to a price drop on Wednesday. However, oil prices stabilized on Thursday.
While the OPEC+ group of leading oil producers does not currently see the need for further oil output cuts, adjustments to policy are always possible, according to Novak. Investors continue to monitor economic data for any indication of energy demand direction.
Technical Analysis
The oil price experienced a sharp decline, dropping below the crucial support level from 3rd April at $79.00, which is now serving as a barrier for bullish investors. As a result, the black gold is anticipated to surrender all of the gains it made following OPEC+'s surprise announcement of production cuts.
Additionally, the RSI has retreated back into the bearish range of 20.00-40.00, suggesting further weakness in the market.
Looking ahead, if the oil price decisively drops below $75.00, it will expose the Low of the 30th March (at $72.70), followed by the support level at $70.00. From there (at breaker zone) the price has a good chance to regain some bullish momentum and potentially seek the liquidity left at the $84.00 price level. That said price could be ranging for while once it has reached that $84.00 price zone as a "stabilisation phase" before breaking out to the upside. Let’s see!
Oil Prices Stabilise Following Economic Concerns
- Russia Reports OPEC+ Sees No Need for Further Oil Output Cuts
- US Economic Growth Hindered by Inventory Decrease in Q1
- Russian Refineries Increase Output as Fuel Exports Rise
On Wednesday, the US saw a decline in capital goods spending, leading to additional pressure on oil prices due to weak risk sentiment spreading from the banking sector, compounded by First Republic Bank's continued slump.
Oil broker PVM's Tamas Varga has attributed the recent oil price decline to weak refinery margins, with heating oil and gasoil as "the main possible culprit for the outsized weakness".
Despite a surprise cut to OPEC production targets this month, worries of a potential recession led to a price drop on Wednesday. However, oil prices stabilized on Thursday.
While the OPEC+ group of leading oil producers does not currently see the need for further oil output cuts, adjustments to policy are always possible, according to Novak. Investors continue to monitor economic data for any indication of energy demand direction.
Technical Analysis
The oil price experienced a sharp decline, dropping below the crucial support level from 3rd April at $79.00, which is now serving as a barrier for bullish investors. As a result, the black gold is anticipated to surrender all of the gains it made following OPEC+'s surprise announcement of production cuts.
Additionally, the RSI has retreated back into the bearish range of 20.00-40.00, suggesting further weakness in the market.
Looking ahead, if the oil price decisively drops below $75.00, it will expose the Low of the 30th March (at $72.70), followed by the support level at $70.00. From there (at breaker zone) the price has a good chance to regain some bullish momentum and potentially seek the liquidity left at the $84.00 price level. That said price could be ranging for while once it has reached that $84.00 price zone as a "stabilisation phase" before breaking out to the upside. Let’s see!
