Technical challenges await WTI and Brent in the forecast of oil prices; where to go thereafter?
Oil Prices Break Out of Range, Dollar Faces Selling Pressure
Oil Prices Gain Momentum
Oil prices have finally broken out of a two-month range and have seen a 2.5% gain in the last two days. This is good news for oil investors.
Dollar Index at Risk
The US Dollar has been facing a lot of selling pressure this week. It is currently at risk of falling below the psychological 100.00 mark. This could be the start of a downward trend for the USD.
Chinese Data and Stimulus Package
China’s recovery has been slow, but the demand for oil remains strong. However, recent import and export data came in below estimates, which could indicate a slowdown in the global economy. There is speculation that China’s leaders may announce a stimulus package to boost their economy.
IEA Market Report and IMF Comments
The International Energy Agency (IEA) released a report stating that global oil demand is expected to rise in 2023. However, they also revised their growth estimate lower due to a global manufacturing slump. The International Monetary Fund (IMF) expressed surprise at positive global growth numbers but warned of risks to the financial sector. They also mentioned a slowdown in China’s recovery, which could affect oil demand.
Upcoming Economic Data
Later today, there will be important data released in the US that could impact oil prices. The Producer Price Index (PPI) will be closely watched. A softer PPI print could be positive for oil prices, while a higher-than-expected print could push prices lower.
From a technical perspective, both WTI and Brent crude oil appear to be running out of steam. The recent rally and breakout of patterns suggest a potential retracement. Support levels to watch are the 200-day moving average for WTI and the break of the triangle pattern for Brent.
Macroeconomic developments will play a significant role in the future of oil prices as we enter the third quarter. It is important to keep an eye on global economic trends and any potential stimulus packages that may be announced.