Crude Oil, WTI, US Dollar, US Jobs, US PPI, Fed, FOMC, EIA, SPR – Talking Points
- Crude oil It found some relief on Friday after falling more than 2% overnight
- The US jobs data and producer price index led the market to bearish hopes Monetary policy
- If the Fed decides to lean in to be accommodative, will WTI rise?
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Crude oil is stable in early trading on Friday, after falling overnight with the US dollar finding firmer ground as the market benefited from some positives from the US data.
Jobless claims were higher than estimates at 264k for last week instead of the 245k expected, but the PPI came in at 2.3%, instead of the 2.5% expected and 2.7% previously.
The jobs data indicated an easing in the tight labor market while the PPI figures led to hopes that consumer price pressures may ease the trajectory.
The two economic data points seem to reaffirm the view that the Fed will stop the hiking cycle at the next meeting of the Federal Open Market Committee (FOMC) in June.
Overnight futures and index swaps (OIS) markets are pricing in the Fed’s September cut despite comments made overnight by Minneapolis Fed President Neel Kashkari. He said that while the CPI was declining, it was still too high.
Data released by the US Energy Information Agency (EIA) on Wednesday was undermining the price of crude oil. It showed an increase in inventories by 2.951 million barrels for the week ending May 5th, instead of expectations for a decrease of 917 thousand barrels.
Earlier in the week, the White House announced that the Strategic Petroleum Reserve (SPR) may begin replenishing stocks as soon as next month. It was exploited to deal with inflationary pressures arising from the rise in energy prices as a result of the Russian invasion of Ukraine.
Crude oil price updates can be found here.
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Technical analysis of WTI Crude Oil
WTI failed to overcome breakout point resistance at 73.93 this week when it hit a high of 73.89 on Wednesday.
These levels may continue to offer resistance ahead of a set of simple moving averages (SMA). The 21-, 34-, 55-, and 100-day moving averages are all located between 75.15 and 76.45.
The convergence of this SMA could indicate further range trading in the near term.
On the downside, support could be found at or below the breakpoints of 66.82, 66.12, 64.36, and the previous lows of 63.64 and 62.43.
– By Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @tweet on Twitter
– By Daniel McCarthy, Strategist for DailyFX.com
To get in touch with Daniel, use the comments section below or @tweet on Twitter