Crude Oil Breaks 200 SMA on China Hopes and Saudi Pressure

Crude Oil has been on a bearish trend for about two years, as the lack of Russian supply to the West with the request of the later didn’t hurt anyone, with Asian countries sucking it up in no time. The price continued to fall, with moving averages acting as resistance and fell below $70 in the US WTI crude, sending Saudi Arabia into panic.

They have been trying to reverse the decline by asking OPEC+ countries to cut production, but the weakness in the global economy which comes form higher interest rates has been having a bigger impact on Oil prices. Although we have seen some decent attempts to reverse the decline in the last several months, which ended up with the 200 SMA (purple) acting as resistance and pushing the price back down.

Although, after the second rejection on Monday last week, the price reversed back up pretty quickly thich was a sign that buyers were serious this time and this week they finally made the break. WTI crude Oil prices experienced a significant increase, rising approximately 3% on Monday and around 5% yesterday. This 24-hour surge marked the strongest performance since June 13th. Moreover, throughout this month, the commodity has seen an impressive 12% increase in its value, and so far this seems to be the best month since the beginning of last year.

The surge yesterday which confirmed Monday’s break of the 200 SMA came after the Politburo meeting in China appeared to indicate a potential shift in economic policy. According to the state news agency Xinhua, officials decided to intensify economic policy adjustments in the country. The focus of these adjustments will be on expanding domestic demand, boosting confidence among businesses and consumers, and taking measures to prevent potential risks. This improved the sentiment for commodities in general and Oil benefited from it, so let’s see if China will keep the word and pull up the economy.

US WTI Crude Oil Live Chart