Oil price falls moderately as USD strengthens, crude oil inventories rise

• The price of oil trades with moderate losses, while the dollar is strengthened by the speeches of the Federal Reserve and the uncertainty about the US debt ceiling.
• Data showing a larger-than-expected build in inventories weighs heavily, but is offset by data showing rising global demand.
• Technically, the price of oil is in a downtrend, but a possible recovery is in sight.

The price of Petroleum fell on Thursday, around a fifth of a percentage point at the time of writing, after the US dollar, the currency in which oil is mainly quoted and traded, posted gains and data from the Information Administration de Energía (EIA) will show a higher than expected increase in inventories.

WTI Crude Oil is trading around $72.60 and Brent around $76.60 at the time of writing. Commodities are finding some support after data from the Joint Organizations Data Initiative (JODI) showed rising global demand for Oil in March on Thursday.

News on oil and markets

• EIA data on Crude Oil Stock Change (May 12) released late on Wednesday shows a 5.04 million barrel rise versus estimates for a 0.92 million barrel drop, indicating a strong offer and pushes down the price of Oil.
• The dollar rose, putting pressure on oil lower after Tuesday’s hawkish comments from Loretta Mester, President of the Cleveland Federal Reserve Bank. Mester upset expectations that the Fed would not need to raise rates further by saying that, given how stubborn inflation was, he could not ensure that the Fed funds rate would be at a level “where it is equally likely that the next move may be an increase or a decrease.”
• The uncertainty surrounding the US debt ceiling negotiations is beneficial for the dollar as a safe haven currency. Rising fears are therefore a support, as is optimism for a resolution, which would provide more indirect stimulus to the economy, raising US Treasury yields in the process, making further rate hikes more likely. and therefore supporting the USD.
• On Thursday, data from the Joint Organizational Data Initiative (JODI) showed rising global oil demand in March, putting a floor for oil price losses.
• The JODI report showed an increase in global demand of 3 million barrels per day (bpd) in March.
• Demand was especially strong in China, according to the Riyadh-based agency’s report, where total product demand increased by 1.6 million barrels per day (bpd) month-on-month, to 16.79 million bpd in March. This is the third largest increase in demand in the country.
• The United States also posted a month-on-month increase in total product demand of 1.77 million bpd, to a total of 21.77 million bpd, while, at the same time, US oil production fell by a quarter of a million bpd. .

Crude Oil Technical Analysis: The Downtrend Is Coming To An End

WTI oil is in a long-term downtrend, making lower lows. Keeping in mind the old adage that the trend is your friend, this favors short positions over long ones. It is trading below all the major daily simple moving averages (SMAs) and all the weekly SMAs except the 200-week SMA at $66.89.

US Crude Oil WTI: Daily Chart

However, a break below the year-to-date lows of $64.31 would be needed to reignite and reconfirm the downtrend, with the next target around $62.00 where the lows around 2021 will come into play as supports. archaic.

Despite the dominant downtrend, there are signs that it could be coming to an end. There is a slight bullish convergence between the price and the RSI at the March and May 2023 lows, with the price making a lower low in May that does not coincide with a lower low on the RSI. This is a sign that the bearish pressure is easing.

The long hammer candlestick pattern that formed at the May 4 (and year-to-date) lows is another sign that it may have been a key strategic bottom.

However, the bulls would have to break above the lower high of $76.85 on April 28 to cast doubt on the prevailing downtrend.