Crude oil price reverses and suffers losses, after debit ceiling debate fails. Republicans left President Biden’s debt-ceiling negotiations.
Crude oil Key Trend Considerations
After Republicans boycotted discussions with President Biden over raising the debt ceiling. The price of oil reversed gains and fell on Friday.
The US Dollar falls as the appetite for safe-haven assets declines. As concerns about the debt ceiling ease; oil is mostly priced in USD.
Increased inflation forecasts are inclined to keep the US dollar’s downside in check.
Despite there are some indications that a bottom might be developing, the oil price is in a technical slump that favors shorts.
After Republican House Speaker Kevin McCarthy left discussions with President Biden over the debt ceiling. Crude oil prices traded slightly down on Friday. Oil had increased early during the day as a result of hope over the debt ceiling. And anticipation of increased demand as a result of the onset of the US traveling season. Since crude prices are mostly quoted in and traded in US Dollars, the US Dollar Index is slightly lower
Crude oil Market movers and Impacting News
After House Speaker McCarthy left Friday’s negotiations with top Democrats and Vice President Biden, concerns over the debt ceiling resurfaced.
In a conflicted address, Fed Chair Jerome Powell emphasizes the necessity of bringing persistently high inflation down. However, at the time, it was believed that the Fed had already partially raised rates due to tighter lending conditions.
The start of the US driving season is quickly approaching, and increased demand for gasoline is anticipated.
Worldwide demand for oil increased in March, according to dataset from the Joint Organizations Data Initiative (JODI),.Which was released on Thursday. Adding to the oil price support
According to the JODI research, worldwide demand increased by 3 million barrels a day in March.
The appetite for safe haven assets declines, putting a strain on the US dollar.
However, forecasts that ongoing restraint in lending and growth will result in greater inflation limit the downside of the greenback. Additionally, rising interest rates will help the USD if they occur.
Technical analysis of crude oil: Negative trend is beginning to reverse
WTI Oil is making smaller lows and is in a long-term decline. This encourages short holdings over long ones. It is in line with the maxim that states as the trend is your ally. Apart for the 200-week SMA at $66.89, it is trading under all of the significant daily (SMA) and all of the weekly SMAs.
The declining trend would need to be sparked and reaffirmed by a break under the year-to-date (YTD) lows of $64.31. With the next objective being around $62.00, where the 2021 dip lows will also come into activity. With resistance around $57.50 to follow.
There are indications that the decline may be ending despite being dominating at the moment. At the March and May 2023 lows, there is a slight positive crossover among price and the (RSI). Yet the price made lower lows in May than the RSI did. This indicates a reduction in bearish momentum.
Another indication which this might have been a significant structural bottom is the lengthy hammer Japanese candlestick configuration. That appeared at the lower levels of May 4.
However, to challenge the dominating bear tendency, oil price bulls would have to move over the $76.85 lower top of April 28.
