Crude oil prices have paused its recent fall. Since 4 May 2023, prices have recovered more than 6%. Prices found some support. As markets weighed the U.S. government’s plans to refill the nation’s emergency oil reserve and anticipated higher seasonal demand.
Brent crude was up 0.97%, at $77.32 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 1.3%, $73.58. MCX crude oil up by 0.50% at 6039.
Energy Secretary Jennifer Granholm has said the administration could start buying back. Crude oil for the Strategic Petroleum Reserve late this year. After President Joe Biden last year directed the largest sale yet from the stockpile.
A report from the Energy Information Administration (EIA) pointing to higher seasonal demand and lower-than-expected output also supported prices.
The EIA also forecasts U.S. crude production will rise 5.1% to 12.53 million barrels per (bpd) day this year. But lowered its output estimate for this year and next from previous forecasts.
It cut its estimate for Brent and WTI prices by more than 7% each to $78.65 and $73.62 a barrel, respectively.
Both benchmarks had fallen about 2.5% earlier in the session after two days of gains.
Prices were held back by data that showed China’s imports contracted in April. While exports rose at a slower pace, implying weak domestic demand.
Markets were also monitoring U.S. President Joe Biden and top Republican lawmakers’ comments on raising the $31.4 trillion U.S. debt ceiling. Fearing an unprecedented default if Congress does not act in three weeks.
U.S. consumer price index (CPI) figures for April are due to be released later today. It could determine the Federal Reserve’s next interest rate decision.
While doubts about the economy could weigh on markets, crude prices were supported. As wildfires prompted oil producers in the Canadian province of Alberta to shut in at least 280,000 barrels of oil equivalent per day. More than 3% of Canada’s output.
Furthermore, Crude Oil Inventories due to released by EIA, could drag volatility in the evening session.
Technical Outlook
Crude oil prices bottomed out from the low of 5545 (4 May 2023) and recently made a high of 6060. Yesterday, prices settled with a gain of 0.50% at 6039.00.
On the above chart, formation of long bullish candle stick is yet indicating a further recovery rally in near future. Further, prices also cross its immediate resistance 6020.0 which also indicates positive momentum in days to come.
On the upside, immediate resistance is seen at 6088. A break above it will open the door for next resistance 6155-6200 very soon.
On the downside, immediate support is seen at 5990-5880.00.
Near future momentum looks positive following the above technical aspects.