Yesterday, crude oil prices were able to increase by more than 1%. Wednesday saw a slight increase in oil prices, extending gains for a second session as anticipated production curbs by the world’s largest oil producers and expectations for increased demand in developing nations helped alleviate global economic worries.
Leading producer Saudi Arabia announced last week that it would continue to decrease output by 1 million barrels per day (bpd) in August, while Russia agreed to reduce exports by 500,000 bpd.
The U.S. EIA predicted on Tuesday that demand would exceed supply by 100,000 bpd in 2023 and 200,000 bpd in 2024.
According to the International Energy Agency (IEA), the second half of 2023 should see further tightness on the oil market due to high demand from China and other growing nations as well as previously announced supply curbs by major exporters including Saudi Arabia and Russia.
However, according to market sources quoting data from the American Petroleum Institute, U.S. oil stockpiles increased by around 3 million barrels in the week ending July 7. A 500,000-barrel increase in crude stock was also predicted by the analysts surveyed by Reuters.
EIA inventory and U.S. CPI numbers will drive today’s trend
That would be the first gain in crude stock in four weeks, according to statistics that the Energy Information Administration is expected to release later today. This is in contrast to a 3.3 million barrel increase in the same week last year and a 6.9 million barrel loss each year on average over the previous five years.
U.S. inflation data is also to be released which will give clues to the interest rate outlook.
Technical Outlook:
Since 5 July 2023, Crude oil turned positive and gained nearly 4.50%. Yesterday, prices settled with a 2.22% intraday gain at 6167.00.
On the above chart, prices have broken up their symmetrical triangle resistance and continued trading upside. This is indicating a well-established short-term uptrend and favours bullish traders.
Adding to this, prices are also trading above their 50 DMA and just started gaining a positive grip which also supported prospects for a further near-term appreciating move.
In the near future, a break above 6210 will lead to the next upside move of 6280-6350.00. Traders may go long above it with a stop loss of 6155.00
Else, any dip towards 6050-6020.00 could attract buying activities.
Alternatively, on the downside crucial support is seen at 5850.00 a break below it prices may retreat towards 5700 and below.
Furthermore, Inventory data and U.S. CPI numbers will decide short-term moves. A lower-than-expected inflation and inventory data could add more than a 2% gain or vice versa.