Crude oil prices retreated nearly one per cent yesterday. Prices came under pressure as the dollar index jumped to a new multi-week high. Earlier, prices rose sharply after U.S. policymakers signalled some progress towards raising the U.S. debt limit and avoiding a default. Traders also bought back into heavily discounted markets after four straight weeks of losses.
Brent crude futures were down by 1.50% to $75.57 a barrel. U.S. West Texas Intermediate crude was at $71.56 a barrel, down 1.40%. MCX crude oil fell by 1.40% and settled at 5930.
This week, both contracts were expected to increase by 2% to 3%, marking their largest weekly advance since early April. Price rose after the Biden administration signalled that it will begin refilling the Strategic Petroleum Reserve. Signs of increased U.S. fuel demand ahead of the summer season were witnessed.
Adding to this, momentum for oil markets remained indecisive. Especially, as some disappointment in economic data from China continued to pressurize it.
Subdued industrial production and retail sales readings were released this week. It suggested that a post-COVID rebound in the country was stalling. Which in turn cast doubts over China driving a recovery in oil demand this year.
A stronger dollar also limited gains in crude markets, given that it makes commodities more expensive for overseas buyers. The dollar was boosted by a flurry of hawkish comments from Federal Reserve officials this week. Who warned that stubborn inflation was likely to keep rates higher for longer.
Crude supplies in the world’s largest oil consumer also remained bloated judging by the data shown this week. As U.S. inventories grew at their fastest pace in nearly three months in the week of May 12.
Technical Outlook
Crude prices retreated by 1.40% yesterday. After hitting a day’s low 5921 settled at 5930.00.
On the above intraday chart, prices were unable to break their immediate resistance at 6085, coinciding with a 38.2% Fibonacci Retracement.
Further, RSI 14 and it’s 9 SMA are also giving a negative crossover.
Both technical aspects are creating a probability for bearishness in the near future.
On the upside, immediate resistance is seen at 6070. A break above only will open the door for the next resistance 6150-6175.00
Alternatively, on the downside immediate support is seen at 5910 below it could test 5850-5785.