Crude Oil, OPEC+, WTI, US Dollar, Economic Data, Treasury Yields – Talking Points
- Crude oil I found a firmer foundation in my post-dip Friday session
- The OPEC+ meeting in June could see some action with conflicting views among members
- Perhaps the artistic image is saying something. Will WTI Crude Oil Resume Rising?
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Yesterday the price of Crude Oil fell to a three week low before a strong recovery as the markets received some positive economic news and the US dollar faced some headwinds. The market is now focusing on the OPEC+ meeting which starts this weekend.
The better-than-expected China Caixin PMI got the ball rolling, offsetting the weak official PMI reading on Wednesday. Private capital spending in Japan was ahead, as was jobs data in the United States. Eurozone CPI also fell, which boosted the mood.
Not every piece of data was rosy, and all the stats on the economic calendar can be found here. Markets also seem optimistic that a US debt ceiling agreement will pass through the Senate late on Friday.
It appears that Treasury yields fell on the prospect of a decision and may continue to do so if the vote passes without incident. The benchmark two-year note is down about 30 basis points from the peak seen at this time last week at 4.64%.
US dollar weakness has been widespread with the growth oriented Australian dollar seen as the biggest beneficiary. Industrial metals also made notable gains in the past 24 hours.
For the oil market, the focus will be on the OPEC+ meeting which begins on Sunday in Vienna. A number of senior officials from oil-producing countries are tugging at production targets.
Surprisingly there is no consistency between the suspension and this puts a lot of focus on this rally. The production cut, announced by the cartel in early April, led to an increase in the oil price gap.
The headlines coming out of this rally could start the volatility next week.
Updated crude oil prices can be found here.
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Technical analysis of WTI Crude Oil
WTI futures hit a low of 67.03 yesterday, just above a stop of 66.82. These levels may provide support, in addition to the previous breakouts and lows 66.12, 64.36, 63.64, 62, 43, 61, 74 and 61.56.
After hitting this low, it rose and price action has now created a bullish engulfing candlestick formation and it could indicate that a bullish reversal may unfold.
On the upside, resistance might be at previous peaks at 74.73, 76.92 and 79.18 before the block area in the 82.50-83.50 region.
– By Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @employee on Twitter
