After seven consecutive day’s falling stick, Crude oil was able to recover around 1.39% yesterday. Prices found support from the ground after the US dollar slipped against its major counterpart amid optimism that holiday travel in China would increase fuel demand in the world’s second-biggest economy.
Greenback weakens as caution set in before a string of central bank rate decisions and key economic indicators over the coming weeks.
Oil prices supported as investors weighed strong holiday travel in China that could boost fuel demand against the prospect of rising interest rates elsewhere, slowing economic growth. Bookings in China for trips abroad during the upcoming May Day holiday point to a continued recovery in travel to Asian countries. Still, the numbers remain far off pre-COVID levels, with long-haul airfares soaring and not enough flights available.
A weaker U.S. dollar can help global demand for oil by making it cheaper for holders of foreign currencies in other countries.However, investors remain wary about central banks in the United States, Britain and the European Union potentially raising interest rates further to curb inflation, which could slow economic growth and dent energy demand.
The U.S. Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates when they meet in the first week of May.
Meanwhile, investors on Tuesday awaited industry data on U.S. oil stockpiles. Analysts polled by Reuters expected the data to show U.S. crude inventories fell by about 1.7 million barrels in the week to April 21. [API/S]
U.S. government data on inventories is due on Wednesday. Both data will have a strong impact on oil prices.
Technical Outlook
crude oil prices have paused its recent downside move, and recovered more than 1.30%. Prices found support from 6322 levels and made an intraday high of 6499 yesterday.
On the above daily chart, prices found support from its previous swing support and formed a long bullish candlestick on the chart which is creating a probability for bullishness in near future.
Prices also were able to trade above its 50 and 100 SMA which also indicated an upside move in near future.
Today, a break above 6502 will extend the recent recovery rally and prices may test immediate resistance 6585-6665` very soon. Can trade with stop loss below 6445.00
On the downside, immediate support is seen at 6420 below it 6320.00.