Crude oil prices rose by almost 10% last week after Saudi Arabia, the world's top exporter, said that its output would drop by 1 million barrels per day, the biggest supply cut by the producer in years, starting in July. Investors and traders are waiting to see if the FED will hike or hold interest rates in June, and what China's May trade data on Wednesday will indicate about demand in the world's second-largest oil consumer. Markets are currently weighing the possibility of a rate pause at 74% compared to a 33% chance of one week ago.
‘Demand is still expected to be a positive market driver after the release of recent economic data, like lower inflation and unemployment in Europe and also higher than expected job openings and NFP in U.S, indicate that both the U.S and Europe are still holding above water with recession signals not flashing just yet. Summer travel season has already begun which is expected to support the price of oil in the short to medium outlook.’ said Antreas Themistokleous, market analyst in Exness.
On the technical point of view the price found sufficient resistance just below the technical resistance around the $74,50 price area which consisted of the 50% of the daily Fibonacci retracement level, the 50 & 100 SMAs and the upper band of the Bollinger bands. Even though the Stochastic oscillator is not indicating any overbought or oversold levels, the 50 SMA is trading below the 1oo SMA indicating that the bearish momentum built up in the recent sessions might continue gaining strength in the short term.
If this is confirmed on the chart we might see some support around the $70 area which is made up of the 23.6% of the daily Fibonacci retracement and also the psychological support of the round number.