Crude oil prices witnessed a speculative jump from the day’s low and recovered more than two per cent yesterday.
Oil prices faced pressure after Chinese trade data disappointed markets on Tuesday, Chinese consumer inflation sank for the first time in nearly two years, data showed on Wednesday. The reading indicated that the world’s largest oil importer will face additional economic difficulties.
China The consumer price index (CPI) fell 0.3% year on year in July, according to the National Bureau of Statistics (NBS), compared to the 0.4% reduction predicted in a Reuters poll. It was the first drop since February 20, 2021.
The producer price index (PPI) fell for the tenth consecutive month, falling 4.4%, quicker than the predicted 4.1% drop.
Prices witnessed sixth consecutive weekly gains last week. MCX Crude oil gained 4.26% at 6859, the longest winning streak since December 2021 to January 2022, because of extended cuts to Saudi Arabia’s production as well as increasing global demand, the EIA said.
Saudi Arabia, the world’s largest exporter, last week extended its voluntary production cut of 1 million bpd through the end of September, adding that it might be prolonged further or deepened. Russia also said it would cut oil exports by 300,000 bpd in September.
Looking ahead, U.S. government data on stockpiles is due later today. Further, U.S Inflation numbers on Thursday are set to release. Both data will have a significant impact on the prices.
Meanwhile, the US Energy Information Administration (EIA) forecast on Tuesday that US crude oil output will climb by 850,000 barrels per day (bpd) to a record 12.76 million bpd in 2023, surpassing the previous top of 12.3 million bpd in 2019.
Technical Outlook
Crude oil witnessed its sixth consecutive weekly gain last week. MCX Crude oil gained 4.26% at 6859, the longest winning streak from December 2021 to January 2022. Yesterday prices recovered from the day’s low of 6629 and settled at 6840.
On the above chart, Crude oil breached and traded above its massive resistance of 6885.00. A strong breakout of it still indicates that the bullish trend is likely to resume. Prices appear to test the next resistance 7050-7150 very soon.
Hence, traders may go long around till every dip 6800-6750 with a stop loss of 6620.00 on the downside, crucial support is seen at 6550 below it at 6450-6250.