Crude Oil was able to gain more than 1.70% yesterday. Prices sparked above previous day’s high amid growing hopes that the U.S. Federal Reserve will taper its hawkish stance. While a recent supply cut by the Organization of Petroleum Exporting Countries and allies (OPEC+) continued to provide support.
Brent oil futures closed to $85.50 a barrel, while West Texas Intermediate crude futures were closed at $81.43 a barrel. Both contracts surged 1.6% and 2.2%, respectively, on Tuesday.
Since morning today, oil prices traded almost flat as markets awaited fresh cues from U.S. inflation. Data due later in the day, with focus also turning to a potential build in U.S. crude inventories.
Data from the API that U.S. oil inventories unexpectedly grew by about 300,000 barrels in the week to April 7. But this was also in part driven by a 1.6 million barrel draw from the Strategic Petroleum Reserve.
Government data due later in the day is expected to provide more clarity on inventories in the world’s largest oil consumer. With analysts forecasting a 583,000 barrel draw. Inventories have shrunk consistently for the past two weeks, as improving weather conditions across the U.S. spurred increased fuel demand.
The prospect of tighter supplies, especially after the OPEC+ cut, kept the near-term outlook for crude markets upbeat.
Now, U.S. consumer price index data and the International Energy Agency inventory due later today, both will drive oil prices. Furthermore, monthly oil market reports from OPEC later this week will be released. Both groups expect a recovery in China to drive oil demand to record highs this year.
Data from China showed that inflation grew much less than expected in March. Indicating a staggered economic recovery in the world’s largest oil importer. With a raft of recent economic readings pointing to a sluggish recovery in China. Markets are betting that the government will likely roll out more stimulus measures to help support growth.
Technical View
Crude prices gained 1.74% yesterday and settled at 6682 as compared to previous day’s close of 6568.00
Since 4 April 2023, prices have been trading in between 6520-6720 levels and forming a bullish flag pattern on the daily chart which indicates a bullish momentum in the near future.
However, the price would need to break above 6720 in order to test 6785-6880-7000. Stop loss will be 6565.00
On the downside, immediate support 6520 below it will test 6420-6250.