Crude oil retreated nearly 2% yesterday pressured by the Iraq federal government and Kurdistan Regional Government (KRG) taking a step towards a resumption in northern oil exports from the Turkish port of Ceyhan after they were halted last month.
Further, today prices traded slightly down as upbeat Chinese economic data failed to deflect the focus from a possible increase to U.S. interest rates and wider concern about the growth outlook.
Brent crude fell 1.06% to $86.24 a barrel . U.S. West Texas Intermediate lost 1%, to $82.39 yesterday. MCX Crude oil settled down by 1.99% at 6632.
Earlier in the session oil had found support from figures showing that China’s economy grew by a faster than expected 4.5% in the first quarter and that oil refinery throughput rose to record levels in March.
But the prospect of another increase to U.S. interest rates, which has been supporting the U.S. dollar, remained a drag on sentiment which restricted gains. Traders expect the U.S. Federal Reserve to raise rates by 25 basis points at its May meeting.
The dollar weakens more than 0.40% after earlier gains. A stronger dollar makes commodities priced in the U.S. currency more expensive for buyers holding other currencies.
Now, focus will remain on Tuesday as the latest snapshot of U.S. inventories. Analysts expect U.S. crude inventories to fall by about 2.5 million barrels and also forecast declines in gasoline and distillates.
The first of this week’s two reports, from the American Petroleum Institute, is due on Wednesday.
Technical View
Crude oil prices retreated from the high 6843 (12 April 2023) and recently made a low 6613. Today, prices traded almost flat at 6618, down by 0.21%.
On the above daily chart, prices faced the resistance of 200 SMA and formed a long bearish candlestick. Which is indicating further correction in days’ to come. However, downside momentum could be limited towards crucial support 6510, coinciding with the previous swing low.
And possible bounceback could expect around 6520-6510, unless Crude oil gives a closing below 6510 levels. Upside level would be 6650-6750.
Alternatively, if the price breaks below 6510 on a closing basis then, prices may retreat towards next support 6350-6280.
Overall sentiment may remain volatile ahead of Crude oil inventory. Till prices may consolidate in between 6750-6520 levels.