No Movement Within Global Oil Markets Pending Outcome from Central Banking Decisions

2 May 2023, Tuesday
No Movement Within Global Oil Markets Pending Outcome from Central Banking Decisions

Crude Oil Drops as Chinese Manufacturing Data Disappoints


Mixed Data and Central Bank Decisions


Crude oil prices fell at the start of this week after a holiday-impacted trading day. The market was affected by a mix of data that caused sentiment to fluctuate. Several central bank monetary policy decisions are expected later this week, which could impact the market.


Chinese Manufacturing PMI


On Monday, Chinese manufacturing PMI for April was lower than expected at 49.2, compared to the estimated 51.4 and 51.9 prior. Non-manufacturing PMI was also lower than anticipated at 56.4, compared to the expected 57.0 and 58.2 previously. This less-than-rosy outlook for growth in the world’s second-largest economy undermined crude oil prices.


US Manufacturing ISM and Construction Spending


Later on Monday, the US manufacturing ISM for April was 47.1, beating the forecasts of 46.8 and 46.3 previously but still in contractionary territory below 50 for the diffusion index. However, US construction spending in March grew by 0.3% month-on-month, beating the 0.1% anticipated and the revised -0.3% prior.


JP Morgan Acquires First Republic Bank


The Federal Deposit Insurance Corporation (FDIC) announced that JP Morgan would be acquiring the beleaguered First Republic Bank. This news lifted Treasury yields along the curve and the US Dollar got a general boost across the board, undermining WTI crude oil prices.


Central Bank Meetings


The Federal Reserve and the European Central Bank (ECB) will be meeting on Wednesday and Thursday respectively. Both banks are expected to raise rates by 25 basis points by the market. Any deviation from this expectation might see volatility for crude oil prices increase.


WTI Crude Technical Analysis


WTI crude oil prices appear to have retreated into a range trading type environment after bouncing off the 50% Fibonacci Retracement level of the move from 64.36 to 83.53 at 73.94. That level may continue to provide support ahead of the breakpoints and prior lows in the 72.25 – 72.46 area. On the topside, resistance could be at the recent high of 79.18. Further up, there are a series of breakpoints and previous peaks in the 82.50 – 83.50 area that may offer a resistance zone.