Crude Oil Prices Look to US Data for Guidance as OPEC News Fades

Crude Oil Analysis and Talking Points

• Global economic growth and the variables of the US dollar are playing a game of tug-of-war with the oil markets.
• US CPI and FOMC are the focal points for the coming week.
• Crude oil prices expect fundamental directions.

Crude Oil Weekly Forecast: Mixed

Crude oil ended the week relatively flat while trading in a limited range due to low volatility throughout the week. Next week brings several high impact US economic releases that are likely to bring excitement back to the global markets. Despite Saudi Arabia’s announcement to cut production by an additional 1 million barrels per day, oil prices haven’t really taken off from there. Misleading information about the US and Iran potentially reaching a deal that could bring in more supplies, the White House quickly dismissed some short-term support for oil.

Hesitation in the markets stems from the possibility that higher inflation in the US via the CPI report (check the economic calendar below) will lead to another Fed rate hike. Unexpected upswings by two developed nations (Australia and Canada) have added to the hardcore narrative; However, the financial markets still prefer to stop the interest rate.

From a USD perspective, the greenback has been on the decline, but if inflation continues to decline, crude oil prices could gain some momentum. Growing fears of a global recession continue to overshadow the demand outlook and major economies release key economic data, and I will closely monitor these data inputs to get a clearer picture of the global economy and whether the incoming data increases or mitigate slowdown concerns.

Economic calendar (GMT +02:00)

source: DailyFX Economic Calendar

Technical Analysis

BRENT CRUDE (LCOc1) daily chart

Chart created by Warren VenkitasI.G

The price action on the daily Brent Crude chart above shows the recent consolidation advance around 75.00 Psychological dealing. The Relative Strength Index (RSI) completes the market’s indecision with a reading around 50 level.

Key resistance levels:

• $80.00
• 50 day moving average (yellow)
• $77.23

Key support levels:

WTI raw (CLc1) daily chart

Chart created by Warren VenkitasI.G

Key resistance levels:

• $75.00 / 50-day moving average (yellow)
• $72.50

Key support levels:

IG customer’s sense: mixed

IGCS shows that retailers are long net with crude oil 80% of traders who are currently holding long positions (as of this writing). At DailyFX we usually take the opposite view of crowd sentiment. However, due to the recent changes in long and short positions, we are in for a cautious short-term action.

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