Oil Will Be Considered Bullish If the 200 SMA Holds As Support

Posted Friday, April 14, 2023 by
Skerdian Meta • 2 min read

Crude Oil gets a boost from China

Crude Oil showed bullish momentum this week, despite retreating lower slightly yesterday. The price of benchmark U.S. crude Oil for May delivery dropped by $1.10, settling at $82.16 per barrel. Similarly, the price of Brent crude for June delivery fell by $1.24, closing at $86.09 per barrel. Crude Oil has been bearish for about a year, with moving averages acting as resistance for US WTI on the daily chart, which fell to $64.30s as the banking crisis hit financial markets.

But, the crisis has abated and central banks are stopping rate hikes, which has improved the sentiment for risk assets such as crude Oil, despite a slowdown in China. US WTI climbed above $80 last week after opening with a massive gap on OPEC’s production cut but was not able to push above the 200 SMA (purple). OPEC was out with it’s monthly Oil report.

OPEC Comments on Its Monthly Oil Market Report

OPEC leaves demand forecast unchanged but flags downside risks to summer outlook
OPEC oil output fell by 86k bpd to 28.8 mil bpd in March
Sees world oil demand to rise by 2.32 mil bpd this year (unchanged from prev. forecast)
Recent reopening of China still not sufficient to reverse declining trend in global refinery intakes
Any economic weakness from rate hikes could weigh on US summer demand
Demand outlook for OECD also remains challenging

US WTI Oil Daily Chart – Buyers Pushed Above the 200 SMA

Can the 200 SMA turn from resistance into support now?

Although on Wednesday, buyers pushed the price above this moving average on the daily chart, after the softer US consumer inflation (CPI). The buildup in EIA inventories didn’t affect the price much, although it wasn’t a huge one.