The stronger USD is also weighing on Oil

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 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.

EIA US Weekly Oil Inventory Data

  • EIA weekly crude oil inventories +597K vs -583K expected
  • Prior was -3,739K
  • Gasoline -331K vs -1,600K exp
  • Distillates -606K vs -764K exp
  • Refinery utilization -0.3% vs +0.5% expected
  • Production 12.3 mbpd vs 12.2 mbpd prior

WTI crude oil was challenging the important $83 zone before the release.

US WTI Crude Oil Live Chart

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