Saudi Jump Fades Quickly in Crude Oil, but the 50 SMA Holds
Crude Oil has found decent support at the 50 SMA, and it is making a bullish reversal, despite the earlier spike on Saudi news faded
The USD has shown increased weakness which escalated during the decline last week, following the US CPI and PPI inflation reports. Risk appetite improved as inflation heads toward normal levels which sent stock markets higher, although today equities are being more cautious, and bond yields are slightly lower compared to last week.
During the European session, there was no significant data or news which would affect the USD or the overall risk sentiment, while in the US we had the EMprire State Manufacturing Index, which came out positive, showing expansion this month, against expectations for a contraction.
Although, there was news related to the Oil market as Saudi Arabia announced that it would prolong its voluntary production cuts until the end of 2024, leading to a decent jump in Oil prices. The price of WTI crude initially jumped from around $74 lows to $76.00 But, the positive effect soon wore off and the spike in Oil prices was short-lived, as it later reversed back down during the European session and lost all the gains, even falling below $74.
Saudi Arabia made a new announcement this morning, stating that it will extend its voluntary Oil production cuts until the end of 2024. This came as a significant development, surpassing their previous surprise decision to extend the cuts until August this year. The extension of the cuts until the end of next year indicates a more prolonged effort by Saudi Arabia to curb the Oil supply and keep prices up.
However, there was some confusion or uncertainty surrounding the news as the newswire that reported this update quickly withdrew the headline. Consequently, Oil prices responded by swiftly reversing again after the first jump. The 20 SMA (gray) held as resistance at the top on the H4 chart, while the 50 SMA (yellow) is acting as support. At the moment we are seeing a reversal higher off the 50 SMA, which looks more sustainable than the previous spike, since stochastic is already oversold on this timeframe chart.
US WTI Crude Oil
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